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Why future projections for Apple are gloomy even after 38 per cent rise in profits

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San Francisco:  Apple announced on Tuesday its profits rose 38 percent in the second quarter due to a surge in iPhone sales.

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However, Apple’s Chief Executive Tim Cook expressed concerns over the rising competition. “The gap is widening between us and our competitors,” Tim Cook said in an interview with the newspaper, the Wall Street Journal.

Headquartered in Cupertino, California, the company earned $10.7 billion during this period, its fiscal third quarter, compared to $7.74 billion in the same quarter of 2014, equivalent to earnings of $1.85 per share, reported EFE.

It sold 47.4 million iPhones in the second quarter, 35 percent more than the same period last year and more than double from four years ago. iPhone sales in China too, more than doubled to $13.2 billion.

In total, iPhone sales contributed $31.4 billion, a 59 percent rise over last year, owing to an average $100 increase in their prices.

Apple Watch concerns?

The company did not share information on the sales of the Apple Watch, which they recently began to sell, although Cook said it exceeded internal expectations.

The gross margin of the company’s profit was 39.7 percent, as opposed to the expected 38.5 percent to 39.5 percent.

Apple shares, however, fell 6.7 percent in after-hours trading at Wall Street, owing to what analysts called gloomy projections for coming months.

The company forecast revenue of $49 billion for the third quarter ending in September, against analysts’ expectations of $51.13 billion.

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To Avoid China Ban, Apple Will Update iPhones

The ban does not cover the new iPhone XS, iPhone XS Plus or iPhone XR, which were not yet available when Qualcomm filed its lawsuit.

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Apple, Campus, China
A customer is entering the Apple store in Fairfax, Virginia. VOA

Apple has decided to update iPhones in China to avoid a ban after a court ruling banned the sale and import of most iPhone models after granting Qualcomm an injunction against Apple.

According to a report in The New York Times on Friday, the Cupertino-based tech giant said it would update the software of iPhones in China early next week to try to resolve the legal dispute.

The company said it would update its iPhones “to address any possible concern about our compliance with the order”.

“Apple said its update would change the iPhones’ software so it did not infringe on Qualcomm patents, which relate to switching between apps and changing the size and appearance of photographs,” said the report.

Apple, Tim Cook, Campus, China
Apple CEO Tim Cook discusses the new Apple iPhones and other products at the Steve Jobs Theater during an event to announce new products in Cupertino, California. VOA

Apple and Qualcomm are suing one another in courts across the world. Billions of dollars are at stake, and each side has claimed some victories.

A Chinese court had banned the sale and import of most iPhone models after granting Qualcomm an injunction against Apple, a stunning decision that comes amid the trade war between the US and China.

Apple, however, is still selling iPhones in China.

According to Don Rosenberg, Qualcomm’s Executive Vice President and General Counsel, Apple is violating the court’s order.

“They are legally obligated to immediately cease sales, offers for sale and importation of the devices identified in the orders and to prove compliance in court,” he was quoted as saying.

Apple, Tim Cook, Campus,China
A guest looks at the Touch Bar on a MacBook computer shown in a demo room following the announcement of new products at Apple headquarters, in Cupertino, California. VOA

Apple has also appealed against the Chinese court ruling.

It accused Qualcomm of playing dirty tricks, including asserting a patent that had already been invalidated by international courts, and other patents that it had never before used.

“Qualcomm’s effort to ban our products is another desperate move by a company whose illegal practices are under investigation by regulators around the world,” Apple said in a statement earlier this week.

Also Read: Apple Expands Its Campus to Austin, East and West U.S.

The ban does not cover the new iPhone XS, iPhone XS Plus or iPhone XR, which were not yet available when Qualcomm filed its lawsuit. (VOA)