Apple's iPhone, app store sales break records

Apple (NASDAQ:AAPL) reported a better-than-expected hike in second-quarter profit Wednesday, as iPhones smashed sales records and more consumers made purchases in the company's app store.

Apple's revenue for the quarter climbed 5 percent, to $45.6 billion, from $43.6 billion in the same period the year earlier. International sales totaled 66 percent of the revenue, according to Apple, and earnings were up roughly 7 percent, to $10.2 billion, from $9.5 billion in the same quarter a year ago.

The hero product during the quarter was the iPhone, which broke a second-quarter record. IPhone shipments totaled 43.7 million units, increasing 17 percent from 37.4 million units in last year's second quarter. The number of Mac computers sold increased to 4.1 million units during the quarter, nearly flat from 3.9 million units a year ago.

Apple's iPad shipments were down 16 percent, totaling 16.3 million units this quarter compared to 19.5 million units last year. That iPad number represents a considerable miss, but Apple CEO Tim Cook attributed it to inventory fluctuations.

Apple's iTunes store was another bright spot for the tech brand, setting an all-time quarterly record for revenue. Total revenue from the iTunes digital library of music, movies, TV shows and apps totaled $4.6 billion, an increase of 11 percent year-over-year. The company says it now has nearly 800 million active iTunes accounts.

Looking ahead, Apple's new retail chief, Angela Ahrendts, officially joins the company beginning next week. Ahrendts comes from Burberry (LON:BRBY), and her much anticipated move to Apple as SVP for retail and online stores was announced in October of last year. Ahrendts takes over as head of retail for the company after John Browett was terminated by Cook after holding the post for a mere six months.

Ahrendts' new post could signal the company's plans to revamp the Apple store experience with the same winning strategy that Ahrendts used to rebrand and re-establish Burberry as a leading luxury label. This attention to innovation and customer service will certainly be an asset, considering Apple's stores have been crucial to the brand's success, bringing in $13 million per store in revenue per quarter on average.

One of Ahrendts' first priorities will be increasing Apple's retail presence in China. Over the second quarter, the addition of China Mobile coupled with the more affordably priced iPhone 4S led to an all-time quarterly record for iPhone sales in China. To keep the momentum going and get more Apple products in customers' hands, the company plans to triple the number of Apple stores there over the next two years.

"We're up to 40,000 points of sales now in iPhone, but we're not nearly where we need to be on the rest of our product line and even the 40,000 is a low number in considering the broad landmass and the number of folks in China," said Cook.

For more:
-See this Apple earnings call transcript

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