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Apple (NASDAQ: AAPL) Surprises With iPhone Sales Beat, Positive Guidance

Even with the meager growth in iPad revenue, as the iPhone accounts for so much of the company’s revenue, and every other major product having a relatively unspectacular quarter, it’s hard to see where growth will come from in the short term.

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The Street is now estimating September quarter revenue of $45.8 billion but that is definitely too high for what guidance will be if Apple only generates the expected $42.1 billion of revenue in the June quarter and follows what it did with the iPhone 6s. The company’s second-quarter earnings report this past April marked the first time Apple had ever reported a decline in iPhone sales. Shares rose 7 percent to $103.47 in after-hours trade following publication of results. China revenue is down 33 percent year-over-year, and 29 percent compared to the previous quarter.

He said he also was encouraged by iPad revenue returning to growth for the first time in 10 quarters and the continued strong growth in revenue for Apple’s services.

Apple said it sold 40.4 million iPhones in the third quarter, more than the average analyst forecast of 40.02 million, according to research firm FactSet StreetAccount.

“It’s opening the door to customers we weren’t reaching before”, he said. This should change with Apple Watch 2, but reading between the lines WWDC suggests this year’s focus may be on watchOS 3, rather than new hardware. It gave that same estimated range for the current quarter ending in September, and said it anticipates revenue coming in between $45.5 billion and $47.5 billion, which would mark another decline from a year ago.

While iPad revenue increased 7% because of its pricier iPad Pro, unit sales fell for a 10th-straight quarter, down 9% to 9.95 million.

Apple had nothing to boast about in its third quarter figures – just that they were not as bad as many in the market had feared.

As iPhone sales level off, Apple is attempting to use such services to wring more revenue out of its existing base of users.

Most of the media is claiming that Apple’s best days are behind it as iPhone sales are slumping. That will be the make or break quarter for Apple – the most important in two years.

He noted that Apple Watch estimates are trending down since IDC data last week indicated Apple shipped 1.6 million smartwatches in the June quarter, down 55% from a year earlier.

Services revenue of $5.97bn was a 19 per cent gain on last year’s quarter. Earnings per share fell to $1.42 from $1.85.

The iPhone SE, Apple’s first 4-inch smartphone since 2013, was launched in March as a lower cost alternative to their flagship 6s and 6s Plus. He alsopredicted that the services division of the business would grow to the size of a Fortune 100 company next year. After the Americas, the Greater China region has recently been Apple’s second-largest market.

Mac revenues of $5.24bn were down 13 per cent, and shipments were down 11 per cent at 4.25 million units.

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That means the likes of Apple Music, Apple Pay (Cook called the growth “astronomical” during a conference call), the App Store, iCloud and iTunes are really starting to pay dividends for Apple. Chief Executive Officer Tim Cook said the company’s sales in China are usually strongest right after an upgraded iPhone is unveiled.

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