ALL EYES TURN TO APPLE INC.’S NEXT iPHONE LAUNCH

Investors can hit the snooze button for another 90 days, as Apple Inc.’s third-quarter results and revised capital allocation program met analysts’ expectations.

That puts the focus on the next iPhone launch, which is anticipated in mid- to lateSeptember.

Apple noted that iPhone demand was affected by consumers anticipating the 10th anniversary edition of the popular smartphone, but it still managed to sell 50.8 million units.

The company also saw the highest absolute number of both upgrades and switchers ever in a six-month period.

“The bottom line was that this was a relatively subdued quarter and call,” said Benjamin Schachter, an analyst at Macquarie Capital Markets.

He highlighted the 2.1-per-cent year-overyear increase in the iPhone average sales price to US$655, as iPhone 7 Plus demand remains high.

However, the gains in Apple’s services business, where the overall number of paying accounts saw its best quarterly growth on record, was of much more interest.

“The Services business continues to perform well and we expect more and more investors will build out detailed models and focus more on the key Services drivers,” Schachter told clients. “That will continue to be a positive for the stock.”

Despite management’s goal to double Services revenue by 2020 (revenue grew 18 per cent year-over-year to US$7.04 billion in Q3), investors remain focused on the iPhone.

Apple has updated the smartphone each year since launch, and redesigned it every two years.

“In our view, consumers are becoming aware of the product cycle and we believe this should cause increased seasonality in the product as consumers await updated and fully remade iPhones,” said Amit Daryanani, an analyst at RBC Capital Markets.

He noted that iPhone sales were better than the headline numbers suggest, as Apple reduced the volume of inventory going through its retail channel by about 1.2 million units in the quarter. That compared to 450,000 units in the third quarter of 2016.