Apple has become the darling of investors
APPLE on Tuesday delivered surprisingly strong fiscal third-quarter earnings and signalled that its upcoming 10th-anniversary phone line-up is on schedule, driving the stock up 6 percent to an all-time high in after-hours trading.
The stock climbed above its intraday record high to $159.10 (R2 103) after the company reported better-than-expected iPhone sales, revenue and earnings per share. The stock price move was expected to help drive the Dow Jones Industrial Average past the 22 000 mark yesterday.
Apple also said it hit a milestone of 1.2 billion iPhones sold.
The April-June quarter is traditionally a soft one for Apple as the market waits for the September launch of new iPhone models. But Tuesday’s results show that iPhone buyers may be less inclined than they once were to delay purchases until a new model is out.
The iPad product lines also showed unexpected strength, service revenue continues to grow at a healthy clip, and even the much-maligned Apple Watch showed a 50 percent sales increase.
Apple is widely tipped to adopt higher-resolution Oled displays for the latest iPhone, along with better touch screen technology and wireless charging – which could come with a $1 000 plus price tag. It is expected to launch in September.
The company forecast total revenue of between $49 billion and $52bn for the current fourth quarter, while analysts on average were expecting $49.21bn.
Apple’s fourth quarter generally includes first-weekend sales of the company’s latest
The rise in Apple’s share price in New York yesterday
The forecast “makes it fairly certain that at least some new iPhone models will be released on the normal schedule,” said analyst Jan Dawson of Jackdaw Research. “That doesn’t necessarily mean all new models will go on sale then, or that they’ll all be in abundant supply, but I would think it means that at the very least the successors to the current phones will be available.”
But Bob O’Donnell, chief analyst at TECHnalysis Research, cautioned that if Apple releases cheaper models before the premium models in its 10th anniversary phone line-up, the cheaper models could dampen sales of more expensive units released closer to the holidays.
The company said iPhone sales rose 1.6 percent to 41.03 million in the third quarter ended July 1, above analysts’ average estimate of 40.7 million units, according to FactSet StreetAccount. Apple sold 40.4 million iPhones a year earlier.
But a lower average iPhone selling price of $606, well below Wall Street expectations of $621, caused iPhone revenue to come in at $24.8bn, below expectations of $25.5bn.
Apple chief financial officer Luca Maestri said the weak price was partly explained by Apple lowering the flow of inventory by 3.3 million units, which he said were “entirely at the high end of the range.”
Apple reports how many phones it sells to retailers, not how many phones it sells to consumers, what is known as a sell-in basis. When factoring how many existing “high end” phones the company cleared out of retail inventory, Maestri said average selling prices were higher.
The company’s net income rose to $8.72bn, or $1.67 per share, from $7.80bn, or $1.42 per share, a year earlier.
Revenue rose to $45.41bn from $42.36bn in the quarter, typically the company’s weakest, beating expectations of $44.89bn.Apple said revenue from emerging markets excluding China grew 18 percent, a bright spot. But sales from the Greater China region fell 9.5 percent to $8bn in the latest quarter, as consumers switched to newer domestic offerings.
The decline was smaller than recent quarters. Apple’s Maestri said mainland China revenue was flat, as were iPhone sales in the mainland. Sales of other Apple products rose in mainland China and were also up in Taiwan. – Reuters
Apple’s latest fiscal and sales results show that the company is riding on a crest of success. Surprising strong third-quarter earnings drove the company’s share price to an all-time high on the New York Stock Exchange yesterday.