Apple bucks tech gloom as it rakes in $53billion
APPLE shares jumped about 2.6pc in after-hours trading last night as it stunned Wall Street with third-quarter revenue of $53.3bn.
The iPhone maker’s earnings beat analysts’ expectations of $52.3bn – confirming its place in the race to become the first $1trillion company.
Revenue from the services division – which includes Apple Music and the App Store – was $9.5bn, trampling expectations, and it sold 11.5m iPads, 3.7m computers and 41.3m iPhones.
Apple’s stellar results come after a week that saw US tech companies take a beating as they missed several analyst predictions.
Facebook issued a bombshell profit warning on Wednesday, prompting investors to wipe a record $120bn off its value in a single session. The next day, Amazon’s second-quarter revenues were lower than expected. And on Friday, Twitter reported a drop in user numbers.
The trio of shocks spooked investors – who are more used to pleasant surprises from Silicon Valley – and focused attention on whether Apple would buck the trend.
Analysts had been expecting the world’s most valuable company to post revenue of $52.3bn (£39.9bn) for the three-month period, as well as sales of 41.8m iPhones.
Its overall iPhone sales of 41.3m slightly disappointed. Despite trade war worries, the total was helped by a buying boost in urban China.
Apple has beaten Wall Street expectations in recent months in spite of fears of an iPhone sales slowdown, partly thanks to the bigger price tag of its latest smartphone. The £1,000-plus iPhone X was launched in November and was the world’s bestselling handset in the first three months of 2018.
But the company has also been boosted by its growing services arm, which as well as its music streaming division and App Store, includes other products such as its £320 Home Pod smart speaker.
Joshua Owen, a trader at Ayondo Markets, said: ‘Apple has stated it wants its services division to be a $50bn company in the coming years, and investors will have to gauge whether this arm can realistically pick up the slack in any fall in hardware sales.’
Meanwhile, Apple boss Tim Cook has turned his attention to repatriating the company’s foreign cash pile and launching a massive share buyback scheme. That has slowed its march towards a $1trillion valuation, but yesterday the company was still well ahead of rivals Google and Amazon, with a value of about $957bn.
Investors were watching closely for hints of a new iPhone model as well, with its third quarter typically seen as the one in which sales of the current version begin to die down. That is because Apple traditionally unveils the next version in September every year.
Some analysts have speculated the firm could launch as many as three new iPhones. However, the company’s former creative guru has claimed it may struggle to repeat its past successes now because the company is becoming ‘a little vanilla’.
Ken Segall said former boss Steve Jobs sought to create an aura around Apple’s products, but he added: ‘The passing of Steve Jobs created a completely different approach to marketing. Tim Cook goes by recommendation of the people around him.
‘In a big company environment, people tend to get safer. In the old days, Apple used to do things that get a lot of attention.’