Apple’s big screen phones were a massive hit, boosting the company’s quarterly profits to record levels, well past the expectations of Wall Street analysts.
In three months, the electronics giant saw $42.1 billion in sales and $8.5 billion in profit, largely driven by the sales of the new iPhone 6 and 6 Plus, which sport much bigger screens than previous models. The quarterly profit is up 13.3 percent from the same period last year when it unveiled the iPhone 5s and sold 33.8 million units, the company said Monday.
This time around, Apple sold a whopping 39 million iPhones – or nearly 300 a minute – even though the smartphone hadn’t yet gone on sale in China, one of Apple’s biggest and fastest growing markets.
Apple predicted an even more prosperous three months ahead, saying it would see between $63.5 billion and $66.5 billion in revenue, with much of that – somewhere between 37.5 percent and 38.5 percent – coming in the form of profit.
In after-hours trading, the stock jumped 1.5 percent, above $101.23 a share, after closing more than 2 percent higher in regular trading. In general, Wall Street analysts expected revenue of about $39.9 billion for the quarter.
Apple has worked to answer critics who say that the firm has not been innovating quickly enough since the death of co-founder Steve Jobs just over three years ago. In September, Apple introduced its first major new product since Jobs's death, the Apple Watch. The wearable device is due out early next year. Last week, the company also announced the launch of new iPads, Macs and its desktop operating system, OS X Yosemite 10.10.
“We are heading into the holidays with Apple’s strongest product lineup ever," Apple chief executive Tim Cook said in a statement.
Not every large screen was a hit for Apple. Sales of the iPad – a category-busting innovation when Apple unveiled it in 2010 – continued to slip. Sales declined 7 percent from the previous quarter to 12.3 million units. That's also 13 percent lower from the same period a year ago.
Cook said the slowing sales a “speed bump," adding that the company believes it can grow iPad sales. He said, for instance, that Apple is still trying to understand when people will trade in their old iPad models and buy new ones.
Regardless, white-hot iPhones were more than enough to account for the slowing tablet sales. Cook said on a conference call with investors that demand for the new iPhones has been higher in every single country compared to last year, and that the company is on track to be selling smartphones in more than 115 countries by the end of December.
Cook said that he sees enormous potential in a China where more people are “graduating into the middle class” than any other time in history. The new iPhone hit stores in China last week and sales in that country were not included in Apple’s most recent results.
Cook also noted that growth in the shipments of Mac computers – Apple’s original product line – were the strongest in years. Revenues from iTunes, software and services reached $18 billion, which, as Cook pointed out, is “more than the annual sales of two-thirds of the companies in the Fortune 500.”
In addition to upgrading its hardware, the company has been aggressively expanding its online services. On Monday, it rolled out its new payment service, Apple Pay, to several major businesses, including Whole Foods, McDonald's and the Apple stores.
Colin Gillis, a technology analyst at BGC Partners, said that Apple Pay -- along with Apple's investment in smart beacons in stores -- gives the company another potential revenue source if its iPhone product line ever slows down.
"While we remain concerned on the iPhone’s shrinking market share," Gillis said in a note ahead of the report, "we are positive on the burgeoning service layer that the company is growing." He added that he'd like to see Apple launch a more advanced music streaming service and a more robust video service to further insulate it against hardware slowdowns.