Apple on the verge of becoming the world’s first $1 TRILLION company as shares hit an all-time high after record results reveal it made $11.5bn in just three months
- Tech giant beat sales estimates in part by selling fewer but pricier iPhones
- Apple sold 41.3 million units, below expectations of 41.8 million units
- Shares of Apple surged 3% to $196.07 on the back of the powerhouse earnings
Apple will report financials for the fiscal third quarter on Tuesday afternoon
Apple blew past Wall Street’s expectations for the fiscal third quarter, buoyed by continued success in its mainstay iPhone business and its Services segment.
The tech giant beat sales estimates in part by selling fewer but pricier iPhones than analysts expected.
Apple sold 41.3 million units, below expectations of 41.8 million units, while the average selling price was price hit $724, beating analyst expectations of $694.
Shares of Apple surged 3% to $196.07 on the back of the powerhouse earnings.
The company reported revenue of 53.3 billion dollars (£40.6bn), up 17% on the same period last year and above analyst expectations of 52.4 billion (£39.9bn).
It also reported net income of 11.5 billion (£8.76bn).
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To hit the trillion-dollar mark, Apple shares would have to climb about seven percent from the $189.91 price logged at the close of official trading Monday on the Nasdaq
APPLE’S EARNINGS BY THE NUMBERS
Revenue: $53.3 billion vs. expectations of $52.34 billion
Profit: $2.34 per share vs. expectations of $2.18 per share
Services revenue: $9.5 billion vs. expectations of $9.1 billion
iPhone average selling price: $724 vs. expectations of $693.59
iPhones sold: 41.3 million units vs. expectations of $41.7 million
iPads sold: 11.55 million units vs. expectations of 10.3 million units
Ahead of the results, the iPhone maker was in a position to move past the one trillion dollar market capitalisation mark if it reported stronger than expected results that sparked a 7% rise in share price.
As of about 5:30 p.m. (ET) on Tuesday, Apple’s market cap stood at about $956.5 billion – a few billion shy of the $1 trillion mark predicted by analysts and investors.
Confirmation of such a result will not come until markets open on Wednesday, but chief executive Tim Cook said he was delighted with the figures reported.
‘We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,’ Apple CEO Tim Cook said in a statement.
‘Our [third quarter] 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.’
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During a call with investors Tuesday evening, Cook said the iPhone X was the most popular iPhone in the quarter ‘once again.’
The stellar iPhone sales were a result of ‘switchers, first time smartphone buyers and existing customers,’ Cook added.
Apple also beat expectations in its Services business, which includes the App Store, Apple Pay and Apple Music, posting $9.5 billion in sales during the quarter. This easily topped Wall Street’s projected $9.1 billion in sales.
‘We had a stellar quarter in Services which generated all-time record revenue of $9.5 billion, fueled in part by double-digit growth in the overall active installed base,’ Cook explained on the call with investors.
Cook said Apple is on target to reach its goal of doubling its Services revenue by 2020.
Many analysts are predicting that the outperforming results could be enough to tip Apple’s market cap over the historic $1 trillion mark – beating out tech rivals Amazon and Google in the process.
To hit the trillion-dollar mark, Apple shares would have to climb about seven percent from the $189.91 price logged at the close of official trading Monday on the Nasdaq.
Apple also managed to blow past analysts’ expectations for average selling prices of the iPhone.
The average selling price came in at $724, which was higher than analysts’ projections of $694.
The higher ASP indicates that Apple sold units of its recent iPhone models, including the high-end iPhone X, which costs $999.
Additionally, Apple’s forward-looking estimates give investors an idea of when the firm will release its next iPhones.
For the fourth quarter, Apple said it expects to post revenue of $62 billion, which is above Wall Street’s expected $59.6 billion.
Apple’s forward-looking estimates could give investors an idea of when the firm will release its next iPhones. If its forecast is higher-than-expected, that could mean Apple intends to release them around the time that they’re announced at its September event
The better-than-expected forecast could mean Apple intends to release new iPhone models around the time that they’re announced at its September event.
The Silicon Valley-based company is expected to unveil new iPhone models in the fall, sticking with its practice of releasing upgraded models annually ahead of the year-end holiday shopping season.
Many analysts believe Apple will release three new models – a 5.8-inch device that appears similar to the iPhone X but with upgraded components, a 6.1-inch iPhone with an LCD screen, making it the cheapest in the lineup, as well as a 6.5-inch iPhone ‘XL.’
However, analysts continue to keep an eye on Apple’s other businesses, as many believe the firm needs other growth engines beyond the iPhone.
Should Apple exceed analysts’ expectations, many predict it could tip Apple’s market cap over the historic $1 trillion mark – beating out tech rivals Amazon and Google in the process. Apple’s stock has been on a tear over the past several years, pushing its valuation higher in the process
WHAT ARE THE 2018 iPHONE RUMOURS SO FAR?
Apple has yet to unveil the iPhone 8, but the latest rumours of its 2018 smartphone have already hit the web.
In August rumours from the supply chain said the iPhone 9 will be available in two sizes, including one with a massive screen that would be Apple’s biggest yet.
The ‘Plus’ size will reportedly have a 6.46-inch screen and will be sold alongside a smaller 5.85-inch model in a bid to compete with Samsung’s Galaxy Note.
The leak came from a source within Samsung Display, the sole OLED supplier for the upcoming iPhones.
The source also said the smaller version was originally going to be a 5.28-inch model but that the firm upped it to 5.85 inches because of growing consumer demand for bigger-screen phones.
In August rumours from the supply chain said the iPhone 9 will be available in two sizes, including one with a massive screen that would be Apple’s biggest yet (stock image, iPhone 6 and iPhone 6 Plus)
A recent Apple leak suggested the firm could cancel the iPhone X.
An analyst says the new model’s disappointing sales could lead to the phone being cancelled – with production stopping as soon as this summer.
This could be the first time Apple has cancelled a phone model since the iPhone 5C in 2014.
Experts believe the lack of interest in the phone is largely due to the notch, which many potential Chinese customers believe removes too much space on the screen.
Now, Ming-Chi Kuo from KGI Securities says Apple will release three new iPhone models including a slightly cheaper 6.1-inch phone without 3D touch.
It could also release an updated iPhone X with a 5.8-inch OLED screen and a larger 6.5-inch OLED model, potentially called the iPhone X Plus.
The 6.1-inch phone will feature an aluminium frame similar to the iPhone 8 and the display will be an LCD panel instead of OLED, he predicted.
The 6.5-inch iPhone X Plus will have similar specifications as the current design but an OLED display and 4GB of RAM, he predicts.
Approximately 70% of Apple’s operating income currently comes from the iPhone.
Its ‘Other Products’ unit, which includes the Apple Watch, AirPods and the HomePod, is also being closely watched for growth.
During the third quarter, other products generated $3.7 billion in revenue.
Billions of dollars that Apple has been spending to buy back shares could help propel the company past a trillion-dollar value mark in the stock market.
Early this year, Apple announced it would buy back $100 billion in shares.
Apple has managed to shine, despite bruises to its image that included being accused of keeping young people addicted to smartphones, slowing performance of older iPhones to motivate upgrades and sidestepping taxes by nestling cash in offshore havens.
Apple will also hold a call with investors at 5 p.m. (ET) on Tuesday. Many on Wall Street will be looking for CEO Tim Cook (pictured) to give more color on the company’s iPhone business
The market will be watching to see whether a battery replacement program and software changes to improve performance of older iPhones are costing the company.
Apple has battled with the US government over making iPhones so secure even police can’t peek at data, and prides itself on not making money off people’s personal information the way ad-targeting companies such as Facebook do.
Apple has hammered away at the growing amount of money it takes in from music, applications, games, subscriptions and services it sells to people using its devices.
Money made from services is seen as an important element of diversification away from having to rely heavily on selling iPhones.
A 31 percent rise in services to $9.2 billion in the first three months of this year followed big jumps in Apple Pay, Apple Music and other programs.
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