Ap­ple crushes es­ti­mates as iPhone sales soar

The Hamilton Spectator - - BUSINESS - ALEX WEBB

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.

GETTY IMAGES FILE PHOTO

Ap­ple re­ported first-quar­ter earn­ings and rev­enue on Tues­day. The com­pany said it sold 78.3 mil­lion iPhones in the fi­nal quar­ter of 2016.

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