SAN FRANCISCO, Nov 2, 2018 (BSS/AFP) – Apple on Thursday delivered
blockbuster earnings, but saw shares punished after a disappointing holiday
season forecast and word that it will stop reporting how many iPhones it
sells.
The California-based technology giant makes most of its money from iPhones,
and sales numbers have been seen as a bellwether of the company’s fortunes.
Apple shares dove 6.5 percent to $207.78 in after-market trades following
the release of earnings figures for a record-setting September quarter.
The firm said net profit climbed 32 percent to $14.13 billion on revenue
that was up 20 percent to $62.9 billion with help from growing sales of
digital content and services to users and other Apple gadgetry.
“We’re thrilled to report another record-breaking quarter that caps a
tremendous fiscal 2018, the year in which we shipped our two billionth iOS
device, celebrated the 10th anniversary of the App Store and achieved the
strongest revenue and earnings in Apple’s history,” said chief executive Tim
Cook.
However, the market was disappointed that Apple fell short of expectations
with sales of 46.9 million iPhones and a forecast for the key holiday season
that was not as robust as anticipated.
The average sale price for the latest iPhones was $793, indicating that
Apple was able to deliver more of its priciest handsets.
Apple offered no detailed breakdown of iPhone sales, but Cook said “the
response has been powerful” to the new 10S models that sell for $1,000 and
up.
Apple executives said that from now on, its earnings reports would no
longer specify numbers of iPhones or other products sold. Instead it would
focus on revenue, margins and cost of sales.
Apple chief financial officer Luca Maestri told reporters on an earnings
conference call that the change stemmed from an increasingly diverse product
line.
“It doesn’t matter how many units there are in there when it comes to the
full value of the shopping cart,” Cook said, adding that “customer loyalty”
was a more important metric.
Revenue in the quarter ended September 29 grew double digits everywhere
Apple does business around the world.
“We set September quarter revenue records for iPhone and wearables and all-
time quarterly records for Services and Mac,” Maestri said.
The world’s most valuable company saw its stock market value briefly dip
below a dizzying $1 trillion based on share price.
– Challenges ahead –
Apple forecast that it would bring in between $89 billion and $93 billion
in the current quarter.
Some analysts thought the estimate may have been conservative, with Apple
being cautious about expectations as it works to balance supply and demand
for a slew of freshly introduced products.
“This is a great set of results from Apple which underlines all of the
innovation the company has put into its suite of products over the past
year,” said GlobalData Retail managing director Neil Saunders.
The latest report offers some positive news for Apple in growing its
services such as streaming music and Apple Pay, allowing the company to
diversify its revenue stream in a saturated smartphone market.
However, the iPhone has been the key driver of revenue and profit for
Apple, and also helps bring more consumers into the company’s ecosystem for
apps and services.
Apple holds around 12 percent of the global smartphone market, with most of
the rest sold by makers of Android-powered handsets.
Analyst Ben Bajarin of Creative Strategies said it is possible Apple failed
to anticipate consumer demand and did not have the right mix of devices in
the past quarter.
Another possibility, Bajarin said on Twitter, is that “Apple may be
intentionally setting lower expectations for holiday.”
The strong US dollar was a “headwind” to sales, particularly in markets
such as Turkey, India, Brazil and Russia, according to Cook.
“In some cases that resulted in us raising prices, and those markets are
not growing the way we would like,” Cook said.
He maintained that Apple has been talking with Indian officials about
opening stores in that country and about duties on the company’s products.
“I am a big believer in India,” Cook said. “I am very bullish on the
country and the people and our ability to do well there.”
Apple’s business in China was strong despite a near moratorium by officials
there on approving new games for the local App Store, according to Cook.