Pricier iPhones Lead Apple to Beat Earnings Expectations
Pricier iPhones Lead Apple to Beat Earnings Expectations
Apple will report earnings on Tuesday
01 August, 2018, 08:55
That beat the $2.17 per share expected by 10 analysts surveyed by Zacks Investment Research.
But on second glance, Apple's numbers tell an interesting story. iPhone sales were barely up compared to the same quarter past year, and at 41.3 million units sold, the analyst expectation of 41.79 million units was actually missed. Apple (NASDAQ:AAPL) sold a total of 41.3 million iPhone units, but the projected amount was 41.6 million units.
Sales of the iPhone were up 20% at $29.9 billion, driven by the range-topping iPhone X, which starts at $999.
Apple'srevenue gains mark the company's best June quarter ever, according to CEO Tim Cook, noting that it's the fourth consecutive quarter of double-digit revenue growth.
The average iPhone now sells for $724. Its mobile unit reported a 22 percent drop in sales revenue to $20.2 billion from the same time a year ago.
Apple historically has kept its prices steady, and kept its new premium phones at a premium price.
Apple is expected to release three new iPhone models, including a less-expensive version that will feature the edge-to-edge display and Face ID technology made popular by the iPhone X.
Apple's increasingly important Services segment saw revenue of $9.5 billion, up 31% versus $7.2 billion during the same quarter a year ago.
The services business also registered sequential growth of 4 percent further proving Apple's strong play in the software and services business. The forecast is a measure of how well Apple thinks it can fare in a market where consumer interest in having the latest and greatest continues to wane. This segment includes AppleMusic, App Store sales as well as Apple Care and iCloud subscriptions.
The Cupertino, California-based technology giant expects fiscal fourth-quarter revenue between US$60 billion and US$62 billion.
The Other Products division, home to the Apple Watch, AirPods, and the HomePod, took in $3.7 billion in revenue, up a whopping 37% year-on-year. All Cook would say is that Apple "couldn't be more excited by the products and services in our pipeline". Mac unit sales were down 13% year over year and Mac revenue was down 5%. Apple also regained growth in China, where sales rose 19 per cent.
Apple, which makes about 56 percent of its revenue from the iPhone, has had to deal with slowing sales growth for its biggest product.
What's propelled Apple's June earnings high and its ability to defy the challenges faced by rival tech stocks this quarter? iPhone revenue was higher than estimated. Cook did not mention India during the earnings call, indicating its declining prospects in the world's fastest growing smartphone market. The guidance suggests that the new iPhones will be available for shipping a week after its launch.
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