Apple's 4th-quarter profit down 9% on cheaper iPhone models

Apple reported an almost nine per cent drop in earnings for the fourth quarter Monday, posting a net profit of $7.5 billion US, or $8.26 per diluted share, as it sold more iPhones but for a lower average price.

Company selling more units but for lower price; posts profit of $7.5B US over $8.2B a year ago

Apple launched a new line of cheaper-priced iPhones last month. The 16GB iPhone 5C sells for $129.99 Cdn in Canada and $99 US in the U.S. with a two-year cellphone plan. The declining price of Apple's iPhones helped drive its profits down even as its revenue rose in the fourth quarter. (Stephen Lam/Reuters)

Apple reported an 8.5 per cent drop in earnings for the fourth quarter Monday, posting a net profit of $7.5 billion US, or $8.26 per diluted share, compared with $8.2 billion, or $8.67 per diluted share, a year ago.

Its quarterly revenue was up about four per cent to $37.5 billion.

"We're pleased to report a strong finish to an amazing year with record fourth quarter revenue, including sales of almost 34 million iPhones," said Apple CEO Tim Cook in a news release.

The company said it sold 33.8 million iPhones, a record for the September quarter, compared to 26.9 million in the fourth quarter a year ago. There were 14.1 million iPads sold in the quarter ending Sept. 28, slightly more than the 14 million a year ago, and 4.6 million Mac computers, compared to 4.9 million in the fourth quarter last year.

International sales accounted for 60 per cent of the quarter's revenue.

The quarterly results included early sales of Apple's new iPhone models, the 5S and the lower-priced 5C, released late last month. But while the number of units sold this quarter was up, the average price of those phones declined, a trend that has trimmed the Cupertino, Calif., company's profit margin and pushed down its stock price.

This marks the third consecutive quarter that Apple's earnings have dropped from the previous year.

Apple said it generated $9.9 billion in cash flow from operations and returned an additional $7.8 billion in cash to shareholders through dividends and share repurchases. 

In its forecast for the first fiscal quarter of 2014, Apple said it expected revenues of $55 billion to $58 billion and operating expenses between $4.4 billion and $4.5 billion. I

Its gross profit margin was expected to stay close to the 37 per cent it was in the fourth quarter and was forecast to fall between 36.5 per cent and 37.5 per cent.

Apple announced the quarterly results after the markets closed. Its shares ended the day up 0.74 per cent at $529.88 on the Nasdaq.  

With files from The Associated Press

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