Demand Woes Bite Apple

Apple proved there is still demand for its venerable iPhone in the face of stiff competition, though it is running into trouble convincing consumers to buy its other gadgets.

Apple and its rivals have faced increasing concern that the consumer electronics industry's boom over the past few years has started to slow. That phenomenon was evident in Apple's latest quarter, when it sold 20% more iPhones than a year earlier, but more customers opted for cheaper models. Its other offerings fared worse. Sales of the company's iPads dropped 14% from a year earlier and demand for Macs fell 7%, contributing to a second consecutive quarter of declines for Apple's overall revenue and profit. Apple's total profit declined 22% to $6.9 billion on roughly flat revenue of $35.3 billion. But the company remains vastly profitable, with a staggering $146.6 billion in cash and investments at the end of the quarter. Apple sold 31.2 million iPhones in its fiscal third quarter, topping expectations, compared with 26 million in the year-earlier period. The average price per phone was about $581, down $32 sequentially from the period ended in March.