Apple earnings beat expectations as it sells pricier iPhones

Jermaine Castillo
August 1, 2018

Apple sold 41.3 million iPhones in the fiscal third quarter, below expectations of 41.8 million units, but the average iPhone selling price hit $724, beating analyst expectations of $694, according to data from FactSet. At almost $10 billion (let's just round for convenience), Services is making up almost 20% of Apple's $53.3 billion in total revenue.

Apple is ever-so-close to becoming the first USA company worth more than $1 trillion: The company closed in on the magic number Tuesday in after-hours trading after posting better-than-expected results for its fiscal third quarter, which ended June 30.

Strong revenue growth of 31% from Apple's services business, which includes the App store and Apple Pay, also boosted its performance.

Some of the most optimistic analysts only predicted $2.26 per share.

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As smartphone buying has plateaued, Apple has extended its iPhone line with both pricier and cheaper versions, from the iPhone X to the lowest priced US$349 iPhone SE.

The firm said its £999 iPhone X - launched a year ago - remained its most popular iPhone model in the quarter and had driven the higher selling prices. Apple sold 11.6 million iPads, 41.3 million iPhones, and 3.7 million Macs during the quarter.

The maker of iPhones, iPads and other products posted revenue of nearly $53.3 billion in the period, also exceeding Wall Street forecasts.

After the markets closed in NY on Tuesday, the Cupertino, California-based iPhone giant reported a $11.5bn profit for the three months ending in June, up 32% from the same period a year ago.

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But several of Apple's services do not face strong rivals. Apple never really explains how specific products in that bucket contribute to the company's overall performance, but Cook did point out on the call the Apple Watch's growth was "in the mid-40s range" this quarter.

The company reported per-share earnings of $2.34 for the quarter, up 40% from the same time previous year and handily beating analysts' consensus estimates of $2.18.

The iPhone revenue allayed fears among some investors after Samsung Electronics (South Korea: 005930) registered its slowest quarterly profit growth in more than a year Tuesday because its Galaxy S9 smartphone missed sales targets.

U.S. markets recovered overnight, led by gains in industrial stocks, following reports that the United States and China were renewing their trade negotiations to prevent the trade war from escalating.

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Apple's best-selling products do not yet face duties stemming from the US-China trade disputes, but US President Donald Trump has threatened hundreds of billions of dollars in further tariffs on product categories not yet been enumerated.

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