Apple crushes estimates as iPhone sales soar
Apple reported quarterly revenue Tuesday that topped analyst projections, fuelled by demand for the company’s latest and priciest iphones.
Apple said sales rose 3.3 per cent to $78.4 billion (all figures US), with earnings of $3.36 a share in the three months through Dec. 31. Analysts forecast profit of $3.22 a share on revenue of $77.3 billion, according to data compiled by Bloomberg. The shares gained as much as 3.2 per cent in extended trading, after the results.
“We were surprised by the strength of iPhone 7 Plus where we were actually short of supply throughout the quarter. We’ve been able to come into supply-demand balance in January,” chief financial officer Luca Maestri said in a phone interview.
Introduced in September, the iPhone 7 represented a modest update to its predecessor, the 6S, adding water resistance, an improved camera, battery life and processor while retaining similar styling.
Expectations are mounting for a more significant upgrade to Apple’s flagship product later this year, which is the 10th anniversary of the iPhone’s launch.
Apple said it sold 78.3 million iphones in the final quarter of 2016, generating $54.4 billion in revenue in the period. The average sales price for each iPhone was $695, compared with $691 a year earlier. Analysts had forecast iPhone unit sales of 76.3 million and an average selling price of $688, according to a Bloomberg News survey. That suggested consumers are still eager to snap up Apple’s latest models, which bodes well for future product launches.
Sales in the three months through March will be $51.5 billion to $53.5 billion, the company said in a statement. The average estimate of analysts in a Bloomberg survey was $53.8 billion. Apple expects a gross profit margin of 38 per cent to 39 per cent in the period, while analysts forecast 38.7 per cent.
“The take-away is that the top end of their guidance is close to where the street is at,” said Gene Munster, a longtime Apple analyst and head of VC firm Loup Partners. “The demand for the 7 Plus was strong when they reported the September quarter and that strength carried on into December.”
Global smartphone sales were largely unchanged in 2016, after years of growth, according to researcher IDC. That puts pressure on Apple because the iPhone generates almost two-thirds of Apple’s revenue.
In addition to churning out new handsets, chief executive officer Tim Cook’s response has been to drive adoption of services such as Apple Music, iCloud and the App Store.
Services revenue again represented the fastest growing segment, with sales jumping 18 per cent to $7.2 billion in the holiday quarter.
Apple reported first-quarter earnings and revenue on Tuesday. The company said it sold 78.3 million iPhones in the final quarter of 2016.