IPhone X marks the spot for Apple
New phone’s strong sales lead to quarterly earnings boost for the company
CUPERTINO » Demand for Apple’s 10thanniversary editions of the iPhone helped the Silicon Valley tech giant sell more than 77million iPhones over the holiday period, lifting its quarterly earnings and sales to new records.
Given the record earnings, investors shook off any immediate concerns about future iPhone shipments even though Apple gave a weaker-than-ex- pected sales outlook for its current business quarter.
Apple said that over the holiday season — its fiscal first quarter, which ended in December — it shipped 77.3 million iPhones, down by 1 percent from the same period a year earlier. However, thanks to the $999 starting price tag on the iPhone X, as well as the new iPhone 8 and iPhone 8 Plus, total iPhone revenue rose by 13 percent froma year ago, to $61.58 billion.
“The iPhone franchise is intact,” said Gene Munster, of Loup Ventures. “Apple’s ability to command a premium has never been more clear.”
With the iPhone in the lead, Apple said it earned $3.89 a share, on $88.3
billion in revenue, for the final three months of 2017. Those results topped analysts’ forecasts for Apple to earn $3.86 a share on sales of $87.3 billion.
“It was a stellar quarter for the iPhone,” said Apple Chief Executive Tim Cook, on a conference call to discuss the company’s results. “The iPhone X was the most-popular iPhone in the quarter, which is particularly noteworthy since we didn’t start shipping until November.”
Among Apple’s othermajor product lines, the company shipped 13.2 million iPads during the quarter, up 1 percent from a year ago, while iPad revenue rose by 6 percent, to $5.86 billion. Mac shipments dipped by 5 percent, to 5.1 million units, andMac revenue declined by 5 percent, to $6.9 billion. Services revenue remained strong, rising 18 percent from a year ago, to $8.47 billion.
But, with the iPhone remaining Apple’s biggest source of earnings and sales, it was the iPhone that got much of the market’s attention. Apple, which showed off its newest iPhones at a company event in September, didn’t start shipping the iPhone X untilNov. 3. The company also dealt with reports of component shortages and shipment delays for the iPhone X during the quarter.
Analysts who follow Apple said iPhone revenue, which rose even though overall shipments slipped from a year earlier, suggests that the company can offset negative reports about Apple planning to cut shipments of the highend iPhone X.
“Even though they sold 1 million less total iPhones in their first quarter over a year ago, their higher ASPs (average selling prices) allowed them to grow the iPhone sales by 13 percent,” said TimBajarin, president of tech research firm Creative Strategies. “And with the iPhone X being the topselling model every week, this does not sound like they are going to cut production of iPhone X’s as rumored anytime soon.”
For its current, fiscal second quarter, Apple said it expects sales to be between $60 billion and $62 billion, while Wall Street analysts had forecast Apple to re- port $66 billion in revenue for the quarter that ends in March.
However, even though Apple’s forecastmissed analysts’ estimates, the company’s shares still rose 3.4 percent, to $173.35 in afterhours trading. Apple has a history of low-balling its quarterly sales estimates, and Bajarin said the company could see some strong sales from its new HomePod digital home assistant, which goes on sale for$349 on Feb. 9.
“Apple always keeps its guidance low, and I suspect that this is a conservative estimate,” Bajarin said. “I actually think people will be surprised by how much revenue Apple will get from the HomePod.”