Apple Inc’s latest quarterly profit leaped as people around the world snapped up big-screen iPhones, but its shares slipped as analysts had expected even more.
The US tech giant reported on Tuesday that its profit jumped 38 percent to US$10.7 billion on surging iPhone sales, compared with US$7.7 billion in the same period last year.
Nevertheless, Apple shares fell more than 6 percent to US$122.41 in after-hours trading, at one point down about 8 percent as traders noticed lower-than-expected sales forecasts.
Photo: Reuters
“We had an amazing quarter,” chief executive Tim Cook said, adding that iPhone revenue in the quarter ended on June 27 was up 59 percent from the same period a year earlier.
Apple sold about 47.5 million iPhones in the quarter, with sales up 85 percent in the Greater China area, where the company’s overall revenue more than doubled to US$13 billion, chief financial officer Luca Maestri said.
“We remain extremely bullish on China and we are continuing to invest,” Cook said, remaining confident that China is poised to be Apple’s biggest market at some point in the future. “We would be foolish to change our plans. I think China is a fantastic geography with an incredible, unprecedented level of opportunity.”
He brushed aside any worry about iPhone sales growth, expressing confidence it has “lots of legs” that it will be running with for many years to come given market factors such customer satisfaction rates and a booming overall global smartphone market.
Apple did not detail specifics on sales of its newly launched smartwatch, instead folding the figure into an “other” category that rose 49 percent to US$2.64 billion.
Cook said during an earnings call that sales of iPhones, iPads, Apple Watches and Macintosh computers “topped internal expectations.”
Analysts had expected Apple to sell even more iPhones and were looking for a brighter forecast than was given for the this quarter.
Nearly three months after the launch of Apple’s fashionably smart wrist wear, some analysts say it is not a mainstream hit. However, others see promise in its popularity with Internet-savvy younger people.
Cantor Fitzgerald experts say Apple Watch will be a “go-to gift” during the year-end holiday season and become the best-selling new product in Apple’s history.
Global Equities Research managing director Trip Chowdhry has estimated Apple would sell 20 million to 25 million of the watches in the final three months of this year.
“We are convinced the watch is going to be one of the top gifts of the holiday season,” Cook said, while fielding questions from analysts on the earnings call.
“I never go anywhere without the watch; not because I am the CEO, but it’s because I am attached to it,” he said. “And, I know a lot of people who feel the same way.”
He said Apple decided from the outset to remain mum about smartwatch shipments to avoid providing insights to competitors, but that the company feels “really great” about sales and how it is positioned for the long term.
“The investors may have gotten a little ahead of themselves,” Forrester analyst Frank Gillett said of Apple’s profit soaring, but shares dipping. “Forget the Wall Street guys. This is an amazing performance.”
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