USA TODAY International Edition
Apple shares rally 7% on less- gloomy outlook
Investors overlook drop in iPhone sales
Apple’s report on quarterly earnings felt like déjà vu on Tuesday, with slackening desire for new iPhones sending sales down. Yet results that topped Wall Street’s lowered estimates, plus its forecast for betterthan- expected upcoming sales for the current quarter, sent stock up 7% after hours.
For the fiscal third quarter, which ended in late June, Apple reported earnings per share of $ 1.42, down from $ 1.85 in the year- ago quarter. Net income fell 27% to $ 7.8 billion.
Sales dropped for the second consecutive quarter, down 15% to $ 42.4 billion. They were hit by waning demand for new smartphones, particularly in its powerhouse market of China. iPhone unit sales fell to 40.4 million, also down 15% year over year, but slightly above the 40 million iPhone unit shipments forecast the in estimates collected by FactSet.
Results “reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” Apple CEO Tim Cook said.
Analysts surveyed by S& P Global Market Intelligence had expected $ 1.38 earnings per share in the recently- completed quarter on sales of $ 42.1 billion. Apple anticipated $ 41 billion to $ 43 billion in revenue.
A tougher market for Apple in China contributed to falling iPhone sales. Its share of the smartphone market in China in May slid to 10.8% from 12% a year ago, dropping it from third place to fifth, according to Counterpoint Technology Market Research. The fop four smartphone makers — Huawei, Vivo, Oppo, and Xiaomi — were all local companies. Apple said sales in greater China were down 33% year over year, pushing the region’s contribution to total revenue behind that of Europe.
In the regular session, Apple closed down 0.7% at $ 96.67. For the current quarter, which ends in September, Apple said it expects to make between $ 45.5 billion and $ 47.5 billion in sales. Analysts on average had forecast $ 45.8 billion in sales.
The forecast “implies the business is perhaps not as bad as expected,” Piper Jaffray analyst Gene Munster said.