Ap­ple sig­nals re­silient de­mand for iPhone helped by sup­port­ing cast

Muscat Daily - - BUSINESS -

San Fran­cisco, US - Ap­ple Inc gave a rev­enue fore­cast that high­lighted re­silient de­mand for the iPhone ahead of the launch of its new mod­els and the grow­ing sig­nif­i­cance of the com­pany’s sup­port­ing busi­nesses.

New iPhones typ­i­cally go on sale in mid to late Septem­ber, which pro­duces a few weeks of rev­enue that are in­cluded in the com­pany’s fis­cal fourth quar­ter re­sults. Some an­a­lysts had re­duced their es­ti­mates on con­cern the new high-end iPhone may be de­layed, but Ap­ple’s pro­jec­tions on Tues­day - and in­creas­ing sales of other prod­ucts and ser­vices - calmed those fears.

Rev­enue will be US$49bn to US$52bn in the three months through Septem­ber, the Cu­per­tino, Cal­i­for­nia-based com­pany said in a state­ment. An­a­lysts had pre­dicted US$49.1bn.

“We’ve put ev­ery­thing we know into com­ing up with the guid­ance,” CEO Tim Cook said in an in­ter­view with Bloomberg Tele­vi­sion. “We re­ally like what we see for the be­gin­ning of the backto-school sea­son.”

The com­pany sold just more than 41mn iPhones in the quar­ter ended July 1, a 1.6 per cent in­crease from a year ear­lier and gen­er­ally in line with an­a­lysts’ es­ti­mates.

Other busi­nesses

Fis­cal third-quar­ter rev­enue rose 7.2 per cent to US$45.4bn com­pared with the av­er­age pro­jec­tion of US$44.9bn. Ev­ery prod­uct cat­e­gory grew, driven by ser­vices such as the App Store. Ap­ple even sold 15 per cent more iPads, a prod­uct that seemed out of fash­ion not that long ago.

Ap­ple’s shares jumped more than six per cent in ex­tended trad­ing af­ter clos­ing at US$150.05 in New York. That put the stock on course to open at a record on Wed­nes­day. Shares have climbed about 30 per cent this year.

“There is some re­lief from the fear of a sig­nif­i­cant pause be­fore the 10th an­niver­sary iPhone re­fresh,” said Michael Obu­chowski, chief in­vest­ment of­fi­cer at Mer­lin Cap­i­tal LLC in Bos­ton, which holds Ap­ple stock. “I’m be­gin­ning to think it won’t mat­ter if the new iPhones aren’t that ex­cit­ing.”

Ap­ple is likely to in­tro­duce three new hand­sets this year: A re­vamped top model, known for now as the iPhone 8, and up­grades to the ex­ist­ing iPhone 7 and iPhone 7 Plus, peo­ple fa­mil­iar with the plans have told Bloomberg News. The high-end iPhone will in­clude an or­ganic light-emit­ting diode screen, and in­ad­e­quate OLED sup­plies mean that it will not be as read­ily avail­able as the cheaper hand­sets at launch, the peo­ple said.

Cook said re­port­ing about the new ver­sions of the iPhone ‘has cre­ated a pause’ in con­sumer buy­ing ‘that is likely larger than pre­vi­ously’.

Ap­ple’s stock has soared on ex­pec­ta­tions that the new high­end smart­phone, which will also in­clude a front-fac­ing three-di­men­sional sen­sor to en­able fa­cial recog­ni­tion, will spur a resur­gence in de­mand that will carry into the hol­i­day quar­ter and be­yond. Sales growth of the com­pany’s flag­ship prod­uct has slowed over the past two years as the mar­ket has be­come in­creas­ingly sat­u­rated and com­peti­tors have of­fered cheaper prod­ucts with sim­i­lar ca­pa­bil­i­ties.

New tech­nolo­gies

Slow­ing smart­phone sales have prompted Ap­ple to in­vest more heav­ily in de­vel­op­ing new tech­nolo­gies. It’s work­ing on smart glasses, an au­ton­o­mous driv­ing sys­tem, im­proved health and fit­ness of­fer­ings, and its own semi­con­duc­tor tech­nol­ogy. Re­search and de­vel­op­ment spend­ing jumped 15 per cent to US$2.9bn in the most re­cent quar­ter.

Ap­ple un­veiled the early fruits of its spend­ing on Aug­mented Re­al­ity (AR) tech­nol­ogy in June, re­leas­ing a set of tools which let de­vel­op­ers build AR soft­ware for the iPhone and iPad when the next op­er­at­ing sys­tem for those de­vices is rolled out later this year. Cook has over the past 18 months re­peat­edly said how ex­cited he is about the prospects for AR.

Cook is pre­par­ing to re­lease Ap­ple’s first new hard­ware cat­e­gory since 2015. The HomePod, the smart speaker that will go on sale in De­cem­ber, is the com­pany’s re­sponse to Ama­zon.com Inc’s Echo and Al­pha­bet Inc’s Google Home speak­ers. The com­pany is hop­ing that ad­vanced acous­tic ca­pa­bil­i­ties will en­cour­age consumers to pay US$349 for the de­vice - al­most three times as much as the Google Home.

The speaker will also serve as a bul­wark in users’ homes to de­liver more rev­enue from ser­vices.

“The App Store con­tin­ued to be a ma­jor driver of the per­for­mance and we couldn’t be hap­pier with how the ser­vices busi­ness is grow­ing,” Cook said.

Sales in Greater China, which in­cludes Hong Kong and Tai­wan as well as the main­land, fell 9.5 per cent from a year ear­lier to US$8bn. The big­gest de­cline came in Hong Kong. Ex­clud­ing cur­rency ef­fects, sales on the main­land were un­changed, Cook said in an in­ter­view.

“The re­sults were very en­cour­ag­ing,” he said. “We were down to hav­ing an is­sue solely in Hong Kong.”

Tim Cook

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