Apple boosted by iPhone X sales, Wall Street sees industrial rebound

Fredrick Soto
August 1, 2018

Analysts were looking for 41.6 million iPhone units in the quarter, and an average selling price of US$699, according to estimates compiled by Bloomberg News. The results surpassed Wall Street expectations of $2.17 per share, the Associated Press reported.

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 U.S. tariffs on United States dollars 200 billion worth of Chinese goods. Apple stock rose 2.5% in after hours trading Tuesday following the earnings report.

But it missed Wall Street's target on phone sales, selling 41.3 million units compared to forecasts of 41.8 million units.

Apple Chief Financial Officer Luca Maestri told Reuters that customers were buying costlier models and the US$999 iPhone X was the quarter's best seller.

Compared to Q3 2017, revenue generated by iPad and Mac sales declined by 5% each, though Apple was able to more than make up for those losses with a 20% increase in revenue earned from iPhone sales.

The average selling price of each iPhone was $724, beating expectations of $699, and higher than last year's $606 ASP. Cook said the Apple Watch delivered record June quarter performance with growth in the mid 40 per cent range and he compared the popularity of the AirPods to that of the early days of the iPod.

However, analysts said that a more relevant picture of Apple's health won't come until September with the launch of three new iPhone models, including a large-screen iPhone X, a more affordable model with a lower cost LCD display and a number of ancillary products. Even more impressive was the growth in revenue from services such as Apple Music and iCloud, which grew by 31% compared to the past year. Its stock increased 3 percent, leaving the company's market cap still hovering around $935 billion.

Apple Pay has been used for more transactions than popular services Square and PayPal, Cook said.

Despite the trade war, China remains one of Apple's best markets, posting double-digit revenue growth in the country for the fourth quarter in a row, Cook said.

The Cupertino, California-based technology giant is expected to announce fiscal third-quarter revenue of $52.3 billion, according to analyst estimates compiled by Bloomberg.

The firm said its £999 iPhone X - launched a year ago - remained its most popular iPhone model in the quarter and had driven the higher selling prices. Net income was $11.5 billion, up 32.1% year-on-year, and gross margin was 38.3%, down about 0.2 percentage points. Sales in that sector rose 31 percent to $9.5 billion. Along with various online TV, news and publishing, gaming and cloud-hosting services, Apple is targeting $50bn in annual services revenues by 2020.

All those iPhone sales help Apple in another way - services like Apple Music, the App Store and elsewhere are booming.

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