Services drove Apple’s best third quarter ever, but iPhone sales aren’t growing

Adjust Comment Print

But on second glance, Apple's numbers tell an interesting story. iPhone sales were barely up compared to the same quarter a year ago, and at 41.3 million units sold, the analyst expectation of 41.79 million units was actually missed.

The firm said its £999 iPhone X - launched previous year - remained its most popular iPhone model in the quarter and had driven the higher selling prices. In a note ahead of earnings, Andy Hargreaves of KeyBanc Capital Markets said that the "the risk of a direct impact from trade conflicts or increased nationalism among foreign consumers that damages worldwide iPhone demand" might offset potential gains for Apple. The company also posted $9.5 billion in services revenue, up 31 percent from the same quarter past year. Apple Chief Financial Officer Luca Maestri told Reuters that customers were buying costlier models and the $999 iPhone X was the quarter's best seller. The company is expected to launch three new phones later this year. The higher revenue can be attributed to not just the increased iPhone sales, but also the fact that the average selling price of an iPhone is much higher than what it was a year ago.

Apple Inc. projected sales that beat analysts' estimates, suggesting consumers continue to snap up the company's high-end iPhones, digital services and wearable devices like AirPods and the Apple Watch.

Overall, Apple reported higher growth in revenue for the 17th straight quarter with sales hitting $53.27 billion.

Shares in the Silicon Valley-based technology titan rose 3.96 percent to $197.83 in after-hours trade that followed release of the earnings figures.

California fires: 50,000 people evacuated as deadly flames destroy hundreds of buildings
US President Donald Trump on the weekend approved California's request for federal help to fight the blaze and assist evacuees. Shasta County Sheriff Tom Bosenko said he can see the fatigue on the faces of the firefighters when they come in to refuel.

Apple has responded to a plateauing global smartphone market by launching ever-more expensive phones and diversifying into services.

Apple services include streaming music and video, where Apple faces competition from rivals including Spotify Technology SA and Netflix. Analysts forecast US$9.2 billion. Tim Cook spent an unusual amount of time focused on Apple's services division during the Q3 earnings call, and for good reason.

Apple said its gross profit margin will be 38 per cent to 38.5 per cent in the fiscal fourth quarter, versus analysts' estimates of 38.2 per cent.

Apple is looking at whether it will be hit by tariffs on purchases the company must make, possibly "related to data centers", Cook said on a conference call with investors.

The iPhone revenue allayed fears among some investors after Samsung Electronics (South Korea: 005930) registered its slowest quarterly profit growth in more than a year Tuesday because its Galaxy S9 smartphone missed sales targets. The Apple Watch had a record quarter with mid-40 percent growth, the CEO also said.

Comments