Apple’s pricey iPhone X, subscriptions deliver earnings beat

30 August, 2018, 20:39 | Author: Camille Rivera
  • Apple beats forecasts by selling pricier phones

Research firms IDC and Strategy Analytics this week reported that the Cupertino tech giant lost its second-place spot in the global smartphone market to China's Huawei during the second quarter of 2018. Much of Apple's supply chain is in China, and the mainland country accounts for the company's second-largest source of revenue, according to FactSet, behind only the U.S.

"We're thrilled to report Apple's best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth", he said.

Shares of Apple rose 4 percent after-hours Tuesday. CEO Tim Cook said that while the company's products hadn't been hurt by tariffs imposed so far, Apple is still examining the impact of proposed US tariffs on $200 billion worth of Chinese goods.

"Each country can only prosper if the other does", he said.

Cook said Apple Music has more than 50 million users when free trials are counted and hinted at the company's video content efforts.

Cook also said he wasn't fazed at the maturity of the smartphone market, which IDC said shrank 2 percent 342 million units in the quarter.

Analysts are predicting iPhone sales to be up slightly on past year, but revenue to rise further thanks to the higher price of the iPhone X, which Apple said, when announcing its last set of results, was its best-selling phone.




"The lesson Apples management has learned from the iPhone X, is when you sell a smartphone for more than $1,000 you can sell fewer units and still reap the financial benefits", said analyst Thomas Forte from D.A. Davidson & Co.

Services: Investors have been watching closely as Apple ups its software and services revenue - a catch-all category that includes the App Store, Apple Care, Apple Pay, iTunes and cloud services.

Apple also reported a 37 percent increase, to $3.7 billion, in the division for miscellaneous hardware, including Apple Watch and the HomePod smart speaker.

A key area for Apple in its results will be iPhone sales - the company's flagship device.

Analysts polled by Bloomberg expect the tech giant to post earnings of $2.16 per share on revenue of $53.31 billion. But Apple saw revenue declines in both the iPad and Mac computers.

Samsung came in first during the period with 20.4 percent global market share, followed by Huawei with 15.5 percent, and Apple with 11.8 percent, Strategy Analytics said.

Apple forecast revenue of $60 billion to $62 billion for its fiscal fourth quarter, beating the $59.6 billion analysts had expected, according to data from Thomson Reuters I/B/E/S. Analysts surveyed by Zacks had expected revenue of $58.59 billion.

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