Published: Wed, August 01, 2018
Money | By Michele Stevens

Apple boosted by selling more expensive iPhones

Apple boosted by selling more expensive iPhones

"The lesson Apple's 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. On a per-share basis, earnings hit $2.34 to beat Wall Street's estimate of $2.18. The company's value had surpassed US$960 billion (NZ$1.4 trillion) in trading before the results were released, and shares climbed around 3 per cent in late trading following the figures. Apple sold 11.6 million iPads, 41.3 million iPhones, and 3.7 million Macs during the quarter.

IPad sales were also up slightly, to the tune of 11.55 million compared to 11.42 million during the same quarter previous year. That's inline with sales from Q3 2017, when Apple sold 41 million smartphones. More importantly, consumers kept buying more expensive iPhones this quarter, with the average sales price rising to $724, up from $606 a year ago.

"Apple gave the Street and tech investors finally some good news" beating earnings forecasts and predicting the current quarter will be strong, GBH insights head of technology research Daniel Ives said in a note to investors.

Apple posted third-quarter revenue of $US53.3 billion and profits of $US2.34 per share, and forecast its revenue would be between $US60 billion and $US62 billion in the fourth quarter.

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For the current quarter ending in September, Apple said it expects revenue of Dollars 60 billion to USD 62 billion.

However, this year the period was seen as a crucial test of the staying power of the iPhone X model, last year's overhauled device. Apple recently celebrated 10 years of the App Store and announced that it has paid $100 billion to developers.

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

Apple said its gross profit margin will be 38 per cent to 38.5 per cent in the fiscal fourth quarter, versus analysts' estimates of 38.2 per cent.

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Apple said the average selling price of the iPhone had risen to more than $US700 in the quarter, showing that each customer is paying more for the company's gadgets.

CEO Tim Cook, in an earnings call with analysts, said that Apple "could not be happier" about the numbers put up by its flagship product.

There is also a sense that the days of soar-away sales are behind the mobile phone industry and investors are now more focused on Apple's services business - which includes Apple Music, iCloud and Apple Pay - for future growth. Analysts expected revenue of US$52.4 billion and earnings of US$2.18 a share.

In other words, don't expect Apple to back off from a product strategy that's helping the company to grow its bottom line.

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