Apple Inc on Tuesday delivered surprisingly strong fiscal third-quarter earnings and signaled that its upcoming 10th-anniversary phone lineup is on schedule, driving the stock up 6 percent to an all-time high in after-hours trading.
The stock climbed above its intraday record high to US$159.1 after the company reported better-than-expected iPhone sales, revenue and earnings per share.
Apple also said it hit a milestone of 1.2 billion iPhones sold.
The April to June quarter is traditionally a soft one for Apple as the market waits for the September launch of new iPhone models, but Tuesday’s results show that iPhone buyers might be less inclined than they once were to delay purchases until a new model is out.
The iPad product lines also showed unexpected strength, service revenue continues to grow at a healthy clip and even the much-maligned Apple Watch showed a 50 percent sales increase.
The company forecast total revenue of between US$49 billion and US$52 billion for the fourth quarter, while analysts on average were expecting US$49.21 billion, Thomson Reuters I/B/E/S said.
Apple’s fourth quarter generally includes first-weekend sales of the company’s latest devices.
The forecast “makes it fairly certain that at least some new iPhone models will be released on the normal schedule,” Jackdaw Research analyst Jan Dawson said.
“That doesn’t necessarily mean all new models will go on sale then, or that they’ll all be in abundant supply, but I would think it means that at the very least the successors to the current phones will be available,” she added.
However, TECHnalysis Research chief analyst Bob O’Donnell said that if Apple releases cheaper models before the premium models in its 10th anniversary phone lineup, the cheaper models could dampen sales of more expensive units released closer to the holidays.
The company said iPhone sales rose 1.6 percent to 41.03 million in the third quarter ended July 1, above analysts’ average estimate of 40.7 million units, FactSet StreetAccount said.
Apple sold 40.4 million iPhones a year earlier.
However, a lower average iPhone selling price of US$606, well below Wall Street expectations of US$621, caused iPhone revenue to come in at US$24.8 billion, below expectations of US$25.5 billion.
Apple chief financial officer Luca Maestri said the weak price was partly explained by Apple lowering the flow of inventory by 3.3 million units, which he said were “entirely at the high end of the range.”
The company’s net income rose to US$8.72 billion, or US$1.67 per share, from US$7.80 billion, or US$1.42 per share, a year earlier.
Revenue rose to US$45.41 billion from US$42.36 billion in the quarter, typically the company’s weakest, beating expectations of US$44.89 billion.
Apple said revenue from emerging markets excluding China grew 18 percent, a bright spot, but sales from the greater China region fell 9.5 percent to US$8 billion in the latest quarter, as consumers switched to newer domestic offerings.
The decline was smaller than recent quarters.
Maestri said China revenue was flat, as were iPhone sales. Sales of other Apple products rose in China and were up in Taiwan.
“The decline from a market standpoint was concentrated in Hong Kong, which is a place that has been really affected by a reduction in tourism because the Hong Kong dollar is pegged to the US dollar,” Maestri said.
Apple chief executive officer Tim Cook declined to directly address US President Donald Trump’s claims that Apple would build three new factories in the US, instead citing the company’s job creation efforts and a US$1 billion US manufacturing fund.
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