Apple Inc on Tuesday reclaimed the throne as the world’s top smartphone seller for the first time in five years, beating out rival Samsung Electronics Co Ltd in units shipped for the holiday quarter and boosting revenue with a strong showing for its new, top-of-the-line iPhone 7 Plus.
The iPhone sales numbers, and a profit of almost US$18 billion, both handily beat Wall Street expectations, sending Apple shares up 3 percent in after-hours trading.
However, the gains were tempered by Apple’s cautious outlook for the current quarter, which it mainly attributed to the strong US dollar, which hurts companies such as Apple that sell a majority of their products overseas by forcing them to raise prices, which depresses unit sales or causes them to sacrifice margins.
Apple sold 78.29 million iPhones in the fiscal first quarter ended on Dec. 31, up from 74.78 million the year before. Analysts on average had expected 77.42 million units, research firm FactSet StreetAccount said.
That beat Samsung Electronics’ 77.5 million smartphone sales in the quarter, the first time that has happened since the fourth quarter of 2011, tech data firm Strategy Analytics said.
The results, which reflected the first full quarter of iPhone 7 sales, come at a time when global demand for smartphones is slowing and cheaper Android alternatives are flooding the market.
Apple might also have benefited from Samsung’s much-publicized recall of the its fire-prone Galaxy Note 7.
Apple is heavily dependent on the success of iPhones, which account for more than two-thirds of its total revenue.
Apple CEO Tim Cook said demand was especially high for the larger iPhone 7 Plus in the fiscal first quarter.
Revenue in the services business — which includes the App Store, Apple Pay and iCloud — jumped 18.4 percent to US$7.17 billion, helped by the popularity of games — including Pokemon Go and Super Mario Run — and increased revenue from subscriptions.
Apple is still looking for new major sources of growth as Apple TV struggles to set itself apart from competitors and its plans to enter the autonomous driving market take shape.
The company said Apple Watch sales set a record last quarter, but provided no numbers.
Analysts expect growth in services to help offset declining hardware sales as the smartphone market matures.
The services business also has gross margins that are higher than Apple’s overall company average, which could help offset the extra cost of new features such as organic LED screens while still meeting an overall gross margin target of between 38 percent and 39 percent.
“That’s a very high-margin business that is helping Apple navigate its innovation,” William Blair & Co analyst Anil Doradla said.
Cook on Tuesday said that he expects services revenue to double in the next four years as the installed base of iPhones and iPads continues to grow.
The company forecast revenue of between US$51.5 billion and US$53.5 billion for the current quarter.
Analysts on average expect revenue of US$53.79 billion, Thomson Reuters I/B/E/S said.
The rate at which the company’s previous customers bought new smartphones was the same as last year in international markets, executives said, without giving specific numbers.
The company has had to raise prices as much as 40 percent in some markets, Maestri said.
“Clearly, this issue of the strong dollar doesn’t help us,” Maestri said.
Analysts on average expect the company to sell 53.43 million iPhones in the current quarter, FactSet said.
For the holiday quarter reported on Tuesday, net income fell from US$18.36 billion in 2015 to US$17.89 billion.
On a per share basis, it earned US$3.36, beating the average analyst estimate of US$3.12, Thomson Reuters I/B/E/S said.
Revenue rose 3.3 percent to US$78.35 billion, compared with the average analyst estimate of US$77.25 billion.
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