Pricier iPhones Lead Apple to Beat Earnings Expectations

George McgeeAug 01, 2018

The company earned $2.34 per share on revenue of $53.3 billion for its fiscal third quarter, compared with EPS of $1.67 and revenue of $45.4 billion. Apple attributed the latter figure to the fact that 2017's MacBook Pros launched within the same quarter last year, whereas this year's models didn't launch until right after the end of the quarter, so those sales are not included in the figures for this year.

But the average iPhone selling price hit $724, well above the expected $694.

Apple said Tuesday that its profit had jumped more than 30 percent to $11.5 billion in the recently ended quarter, besting market expectations despite selling fewer iPhones than analysts projected. In the last quarter, Apple's services made $9.5 billion, making it the second-largest business segment for the firm. That's in line with the company's recent forecast and translates to year-over-year revenue growth of about 15 percent, the strongest for Apple's June quarter since 2015. The company's net income for the quarter was $11.52 billion compared to $8.72 billion a year ago. If it does, Apple will be the first United States company to pass the trillion dollar milestone.

The company stock price now sits at $190.30 and reached an all-time high of $195.96, which would put Apple at $990bn when the stock market opens tomorrow.

Apple's guidance for the fourth quarter of fiscal 2018 includes expected revenue of $60-62 billion and gross margin between 38 and 38.5 percent. It also makes Mac computers, iPads and the Apple Watch, develops software and operates Apple Pay, the mobile payment system, and Apple Music, the music streaming service.

Luckily, a long-underappreciated Apple division is coming to the fore: Services. -China trade disputes, but President Donald Trump has threatened hundreds of billions of further tariffs whose product categories have not yet been enumerated. It still has about $10 per share, or 2%, to go. According to CNN, all those Apple products are adding up to some massive economic gains for the company.

Finally, while Cook expressed opposition to new trade tariffs between the U.S. and China, noting how they're anti-consumer, he said that Apple is continuing to see double digit growth in China along with other major markets.

But one of the categories potentially affected by tariffs is the Apple Watch, which is one of Apple's growth drivers.

Gross margin for the quarter was 38.3 percent compared to 38.5 percent in the year-ago quarter, with worldwide sales accounting for 60 percent of revenue.

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