Apple’s results: strong earnings in Q3

6 years ago - Published in Breaking views

Apple Inc sales led by the pricey iPhone X pushed quarterly results far beyond Wall Street targets on Tuesday, with subscriptions from App Store, Apple Music and iCloud services bolstering business.
The world’s most valuable technology company also forecast revenue above expectations for the fall, when it typically launches new iPhone models, reassuring a nervous tech sector that saw sell-offs last week in Facebook Inc, Twitter Inc and Netflix Inc on concerns about their future growth.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” Apple CEO Tim Cook said in a press release. He noted strong iPhones, services and wearables sales boosted results.

The Cupertino, California company has responded to a plateauing global smartphone market by launching ever-more expensive phones and diversifying into services, prospering even as rival Samsung Electronics Co Ltd missed targets for its flagship Galaxy S9 and China’s Huawei Technologies Co Ltd took the No. 2 global smartphone sales spot.

Here’s how the company did compared with Wall Street projections:

EPS: $2.34 vs. $2.18, according to Thomson Reuters consensus estimates
Revenue: $53.3 billion vs. $52.34 billion, according to Thomson Reuters consensus estimates
iPhone sales: 41.3 million vs. 41.79 million, according to StreetAccount
The quarterly report comes after a market rout for major tech stocks. Silicon Valley giants Facebook and Twitter each shed 20 percent after disappointing reports last week.

Shares of Apple rose 4 percent in extended trading, after the company fell right in line with analyst projections of strong upsides for the quarter that ended June 30. EPS grew by 40 percent year over year, and revenue grew by 17 percent year over year.

Many were hanging high hopes on Apple’s flagship handset and its climbing average selling price (ASP). The 41.3 million iPhones shipped during the third quarter is basically flat from the year-ago period, but the ASP of $724 is a notable jump from the year-ago period. That ASP bump is likely be because of the pricey iPhone X, which starts at $999.

Apple also touted growth in its other products, marking over 60 percent growth in wearables, which includes the Apple Watch, AirPods and Beats headphones. The company’s total “Other Products” category, which also includes the HomePod, saw a 37 percent year-over-year jump in revenue, totaling $3.74 billion. Analysts had forecast $3.67 billion in revenue for the segment during the third quarter.

The iPhone X was Apple’s best-selling device from the time it hit stores Nov. 3 through the end of the fiscal third quarter, even though it was the most expensive phone Apple’s ever made. The 5.8-inch device starts at $999, or $300 more than the 4.7-inch iPhone 8 and $200 more than the 5.5-inch iPhone 8 Plus.

“Based on the latest data from IDC, iPhone grew faster than the global smartphone market, gaining share in many markets including the U.S., Greater China, Canada, Germany, Australia, Russia, Mexico and the Middle East and Africa,” Cook said Tuesday.

Apple doesn’t break out results for its Apple Watch, AirPods or other gadgets but lumps them into “other.” Revenue in that segment soared 37 percent from the previous year to $3.7 billion. Wearables alone jumped over 60 percent from the previous year, Cook said, with Apple Watch up “in the mid-40 percent range.”