Wednesday, 17 October, 2018

Apple earnings beat expectations as it sells pricier iPhones

Apple iPhone X Apple will report earnings on Tuesday Credit Getty
Lindsey Cook | 01 August, 2018, 08:55

Apple unit sales rose just 1 per cent from a year ago, which was expected, but the average selling price grew 20 per cent to Dollars 724 per iPhone, up from USD 606 a year ago.

CEO Tim Cook said that while the company's products hadn't been hurt by tariffs imposed so far, Apple is still examining the impact of proposed United States tariffs on USD 200 billion worth of Chinese goods.

Shares in the Silicon Valley-based technology titan rose 3.96 per cent to US$197.83 in after-hours trade that followed release of the earnings figures, putting its market capitalisation at US$956 billion.

Apple sold 41.3 million phones from April to June, a modest bump from the 41 million sold during the same period in 2017. 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 California-based giant's performance for this quarter is much better compared to the same period past year, where Apple posted a revenue of $45.4 billion, quarterly profit of $8.7 billion, or $1.67 EPS.

The average iPhone now sells for $724.

Sales of iPhones in the fiscal third quarter have typically been tame as many fans have historically either bought handsets in prior months or end up waiting for new models in the months to come. Apple said iPhone shipments edged about 1% higher.

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"Over time, it is inevitable that "other products" will become the third-largest revenue line item for Apple", notes Neil Cybart, Apple analyst at Above Avalon, ultimately overtaking Macs and iPads, while still behind iPhones and services.

Apple's guidance for the fourth quarter of fiscal 2018 includes expected revenue of $60-62 billion and gross margin between 38 and 38.5 percent. That's because the pricy iPhone X has been performing well; it has consistently been the best-selling iPhone since it launched last November. In order to stay dominant at the top of the market, Apple has to find another mechanism to feed its shareholders the profit they demand. Many Americans have at least one piece of Apple tech in their household, and the same can be said for residents of European and Asian countries.

Apple made more money from higher priced iPhones in the latest quarter, even as the number of phones it sold did not change much. In February, Apple said it expected revenue of between $51.5 billion and $53.5 billion for the quarter.

"Our Q3 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", CEO Tim Cook said in a statement accompanying the results.

The division grew revenues by 31 per cent in the quarter, with the success of apps such as the video game Fortnite believed to have contributed to the increase.

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