Apple Profits At $10.7bn As iPhone Sales Soar

Record (LSE: REC.L - news) iPhone sales helped Apple (NasdaqGS: AAPL - news) report profits of $10.7bn (£6.9bn) on revenues of $49bn (£31.5bn) in the past three months.

The quarterly results for the technology giant showed its signature smartphone remains the jewel in the company's crown though the long-term prospects of the Apple Watch remain unclear after it refused to reveal sales figures.

More than 47.5 million iPhones were sold between April and June. Sales normally slow in this period, as shoppers hold off in anticipation of the company's new model, which is typically launched in the autumn.

This figure is a 35% increase on iPhone sales for the same period last year - and more than double the number of handsets sold in the third quarter of 2011.

A move to larger smartphone displays has helped Apple wrestle away market share from competitors who had begun to offer such models many years earlier.

In addition, a quarter of the company's overall revenue in the three months to 27 June came from China - a new market which Apple has found difficult to crack in recent years.

Apple also sold 10.9 million iPads over this period and the Californian company said it would not disclose how many of its smartwatches were sold for fear the data could be used by competitors.

However, Luca Maestri, the company's Chief Financial Officer, said the watch has beaten "internal expectations" - as the number of units sold in the first nine weeks following its launch was higher than the levels achieved by the first iPhone and iPad.

When put into context, 1 million iPhones were sold in the 10 weeks after its launch in 2007, while iPad sales stood at three million in the 11 weeks after it first hit the shelves in 2010.

Even (Taiwan OTC: 6436.TWO - news) though the raw statistics seemed promising, Apple's stock fell by 7% in after-hours trading - wiping £53bn (£37bn) from its market value.

Market analysts cited various reasons, including concerns that iPhone sales might slow in future while a knock-on effect damaged the value of London-listed chip-maker ARM Holdings (LSE: ARM.L - news) despite it announcing a 32% rise in second quarter profit.

However, Apple is expected by many experts to benefit from its extensive user base - with hundreds of millions of customers who own older iPhones likely to upgrade to the latest models at the conclusion of their mobile phone contracts, which typically run for two years.

The Apple Watch is regarded with great importance by investors, as it is the first major new product that has been launched by the company since the death of its former CEO and founder Steve Jobs in 2011.

Meanwhile, the debut of Apple Music has seen the company diversify its music offering and challenge Spotify in the streaming arena. This has been coupled with the launch of a new radio station.

The network, Beats 1, had exclusive rights to announce the nominations for MTV's Video Music Awards on Tuesday - but this was disrupted after a dozen Apple services, including iTunes and the App Store, endured a four-hour outage .

Despite Apple's good fortunes in the smartphone sector, some of its biggest rivals haven't been so lucky.

Minutes before its financial report was published, Microsoft (NasdaqGS: MSFT - news) announced a net loss of $3.2bn (£2.1bn) following a substantial writedown on the value of its smartphone business, which was acquired from Nokia.

BlackBerry's woes have also deepened further, with the Canadian company announcing yet another round of job cuts.

Faced with weakening smartphone sales, the company has shed thousands of roles since 2013 - in an attempt to cut expenses and reduce the cost of manufacturing and developing new models.

At its peak, BlackBerry's workforce numbered 20,000, but a lack of innovation compared to the likes of Apple and Samsung saw it begin to fall behind - and as of February, just 6,225 people were working full-time at the company.