Apple forecast tops estimates on expectations consumers will snap up iPhones, wearable devices
Apple shares rose 2.4 percent in extended trading on Tuesday, moving it closer to becoming the first U.S. company with $1 trillion in market value.
Apple projected sales that beat analysts’ estimates, suggesting consumers continue to snap up the company’s high-end iPhones, digital services and wearable devices like AirPods and the Apple Watch.
The Cupertino, California-based technology giant expects fiscal fourth-quarter revenue to be between US$60 billion and US$62 billion. Analysts were looking for US$59.4 billion, according to data compiled by Bloomberg.
Apple shares rose 2.4 per cent in extended trading on Tuesday. The stock closed at US$190.29 in New York and has gained 12 per cent this year, moving Apple closer to becoming the first US company with US$1 trillion in market value.
More than a decade after its debut, the iPhone is still Apple’s most-important product, accounting for about 60 per cent of revenue. While unit sales have slowed recently, the company is building digital services and a suite of other gadgets around the device. Those newer businesses, along with higher iPhone prices, have supported revenue growth.
Apple’s fiscal fourth-quarter outlook is closely watched because this is usually the period when the company unveils new iPhones. The company is expected to launch three new phones later this year. That’s raised Wall Street expectations for more sales and profit.
The results “were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline", Tim Cook, Apple’s chief executive, said in a statement.
Fiscal third-quarter sales rose 17 per cent to US$53.3 billion, Apple said. Profit came in at US$2.34 per share. Analysts expected revenue of US$52.4 billion and earnings of US$2.18 a share.
The company sold 41.3 million iPhones in its third quarter, generating revenue of US$29.9 billion. That was driven by a higher average selling price of US$724, thanks in part to the iPhone X, which starts at US$999.
Analysts were looking for 41.6 million iPhone units in the quarter, and an average selling price of US$699, according to estimates compiled by Bloomberg News.
Apple reported record services revenue of US$9.55 billion, up 31 per cent from a year earlier. Analysts forecast US$9.2 billion. The category includes the App Store, Apple Music, iCloud storage and Apple Pay. The company is working on expanding these offerings with original videos and a news subscription service. Apple wants services to be a US$50 billion annual business by 2021.
Apple said its gross profit margin will be 38 per cent to 38.5 per cent in the fiscal fourth quarter, versus analysts’ estimates of 38.2 per cent.
The company’s Other Products segment continued to see strong growth, with revenue up 37 per cent to US$3.7 billion. The category includes AirPods headphones, the Apple Watch, Apple TV and the HomePod.
Apple said it sold 11.6 million iPads in the quarter, up from the 11.4 million in the year-ago period. In March, Apple launched an updated iPad geared toward students. It is also working on an upgraded Pro model with iPhone X features like Face ID, which could increase sales of the device.