Apple earnings beat expectations as it sells pricier iPhones

01 August, 2018, 02:03 | Author: Mary Valdez
  • Apple working on dual-Sim iPhone models

The company earned $2.34 per share on revenue of $53.3 billion for its fiscal third quarter, compared with EPS of $1.67 and revenue of $45.4 billion. Apple (NASDAQ:AAPL) sold a total of 41.3 million iPhone units, but the projected amount was 41.6 million units.

Investors were watching closely to see if Apple would be entangled in the FAANG meltdown, which hammered shares of Facebook (FB) and Netflix (NFLX) last week in a broader sell-off.

High-priced iPhones continued to sell well with the iPhone ASP hitting $724. iPad sales came in at 11.6 million units.

Revenue reached $53.3 billion, an increase of 17% from a year ago and exceeding Wall Street's projections of $52.34 billion.

And Apple has used its pile of cash to buttress share prices, buying back $20 billion in stock in the quarter, part of a $100 billion stock buyback program.

The firm said its £999 iPhone X - launched past year - remained its most popular iPhone model in the quarter and had driven the higher selling prices.

The results "were driven by continued strong sales of iPhone, services and wearables, and we are very excited about the products and services in our pipeline", Tim Cook, Apple's chief executive officer, said in a statement. With a market capitalization of more than $900 billion, Apple is tickling at the title of world's first trillion-dollar company.

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Investors reacted enthusiastically, driving the stock up 5% in after-hours trading to $195.90 a share. This segment includes Apple Music, App Store sales as well as Apple Care and iCloud subscriptions.

Luckily, a long-underappreciated Apple division is coming to the fore: Services.

Apple's biggest selling products do not yet face duties stemming from the U.S. And look out, Spotify: Apple Music grew over 50 percent since past year, as did revenues from the company's cloud services. Apple never really explains how specific products in that bucket contribute to the company's overall performance, but Cook did point out on the call the Apple Watch's growth was "in the mid-40s range" this quarter.

Gross margin for the quarter was 38.3 percent compared to 38.5 percent in the year-ago quarter, with worldwide sales accounting for 60 percent of revenue.

"We are not able to catch up to demand yet and continue to add capacity for the AirPods", Mr Maestri said. Services revenue was up 31% YOY at $9.54 billion, which was also better than Wall Street's expectations.

Apple's margins are facing pressure as it moves to put pricier components, such as OLED displays that show more vivid colours, into its products.

The company said it expects fiscal fourth quarter revenue to be between $60bn and $62bn, against analyst estimates of $59.5bn.

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