Ap­ple has be­come the dar­ling of in­vestors

The Star Early Edition - - INTERNATIONAL - Anya Ge­orge Tharakan and Stephen Nel­lis


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.

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