Date
18 August 2018
Apple quarterly results came ahead of Wall Street expectations, but some analysts are concerned about rising operating expenses. Photo: Reuters
Apple quarterly results came ahead of Wall Street expectations, but some analysts are concerned about rising operating expenses. Photo: Reuters

Apple June quarter revenue, profit top estimates

Apple Inc reported on Tuesday revenue of US$53.3 billion for its fiscal third quarter, topping market forecasts, on robust sales of iPhone X and higher income from App Store, Apple Music and iCloud services.

The company sold 41.3 million iPhones overall in the quarter, below analyst estimates of 41.8 million units, but the average unit selling price surpassed forecasts, at US$724.

Chief Financial Officer Luca Maestri told Reuters that customers were buying costlier models and that the US$999 iPhone X was the quarter’s best seller.

The tech giant posted a profit of US$11.52 billion for the three months to June, or US$2.34 a share, which was also ahead of Wall Street estimates.

The stronger-than-expected results helped push Apple shares up 3.4 percent to US$196.80 in after-hours trade. 

For the current quarter, Apple forecast revenue of US$60-62 billion, beating the US$59.6 billion that analysts had expected, Reuters reports.

Apple has responded to a plateauing global smartphone market by launching ever-more expensive phones and diversifying into services.

Chief Executive Tim Cook credited “wearables”, a category which includes wireless earphones and the Apple Watch, with making growing contributions as well.

Maestri told Reuters that the wearables business has generated US$10 billion in sales in the past 10 quarters and saw sales increase 60 percent in the most recent quarter.

“We are not able to catch up to demand yet and continue to add capacity for the AirPods,” he said.

Services revenue was US$9.5 billion in the third quarter, beating analyst expectations of US$9.1 billion. 

Apple services include streaming music and video, where Apple faces competition from rivals including Spotify and Netflix.

Apple’s margins are facing pressure as it moves to put pricier components, such as OLED displays that show more vivid colors, into its products.

The company said it expects gross margins of 38 percent to 38.5 percent in the fourth quarter, compared with analyst expectations of 38.3 percent.

Analysts are also closely watching Apple’s operating expenses, which have been increasing as its research and development costs outpace its revenue growth, Reuters noted.

Apple said it expects operating expenses of US$7.95-8.05 billion in the fourth quarter, compared with analyst estimates of US$7.8 billion.

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CG/RC

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