Apple sold fewer iPhones than it expected to in the third quarter but it made more money doing so, thanks to the increasing popularity of the high-end X model. It also saw Apple Watch sales growing in the “mid-40% range” and its services revenue surge 31% year over year, setting it on track to become the world’s first trillion-dollar company.
“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” touts CEO Tim Cook in the Apple news release reporting the results and projecting revenue between $60 billion and $62 billion and gross margin between 38% and 38.5% for the forthcoming quarter.
“Analysts were looking for $59.4 billion, according to data compiled by Bloomberg,” writes Bloomberg’s Mark Gurman in reporting that the results and projections at one point sent its shares to a record $198 in extended trading.
And that optimism pushed Apple’s market value to more than $950 billion, says Jack Nicas in the New York Times.
“Apple’s ascent past $1 trillion in market value would further confirm a remarkable turnaround from the brink of bankruptcy two decades ago. The steep growth was driven by a series of new products that upended the technology industry — and, in some cases, society — and that remain big sellers,” he writes.
Indeed, “more than a decade after its debut, the iPhone is still Apple’s most-important product, accounting for about 60% of revenue. While unit sales have slowed recently, the company is building digital services and a suite of other gadgets around the device. Those newer businesses, along with higher iPhone prices, have supported revenue growth,” Bloomberg’s Gurman adds.
“Apple’s move to raise iPhone prices continued to pay off in the period, with sales of the company’s flagship product rising 20% to $29.91 billion even as shipments rose less than 1% to 41.3 million,” Tripp Mickle reports for the Wall Street Journal. “Though iPhone sales usually weaken in the spring and summer as anticipation builds for new devices expected in September, Apple finance chief Luca Maestri said demand has remained consistent, particularly for the iPhone X, 8 and 8 Plus.”
Samsung, meanwhile, lost share and its mobile revenue fell 22% annually to 22.7 trillion won ($20.4 billion), Eric Jhonsa reports for TheStreet. “The fact that the Galaxy S9 (unlike the Galaxy S8 in 2017) began shipping in March rather than April played some role here. But so did disappointing sales for Samsung's latest flagship,” he writes.
“Moreover, Samsung forecast that in the near-term, ‘new model launches and intense price competition’ will lead conditions for its mobile business to remain challenging. The company plans to respond in part by launching the Galaxy Note 9 earlier than it launched the Note 8; Samsung's next-gen phablet will be unveiled at an August 9th New York event,” Jhonsa continues. The “Unpacked” event will be at Brooklyn’s Barclay Center, to be exact.
As upbeat as Apple’s forecast may be, prospects are not all hunky-dory.
“Apple CEO Tim Cook reiterated the company’s position that tariffs can have ‘unintended consequences’ for consumers and the economy, and are generally not the right approach for modernizing U.S.-China relations, but glossed over what, if any, impact the new set of tariffs on $200 billion in goods could have on Apple products,” writes CNBC’s Chloe Aiello.
“...The trade relationships and agreements that the U.S. has between the U.S. and other major economies are very complex, and it’s clear that several are in need of modernizing, but we think that in the vast majority of situations that tariffs are not the approach to doing that,” Cook said during an earnings call transcribed by Seeking Alpha.
CNBC “Mad Money” host Jim Cramer called Apple “the greatest consumer products company in history” yesterday, suggesting that it’s still a bargain for wanna-be investors.
“If you still don't own Apple, Cramer had one thing to say: ‘Get with the program,’” writes CNBC.com’s Elizabeth Gurdus.
And just how big is a trillion-dollar valuation, you may have wondered while contemplating your own 401(k) needs. U.K. radio journalist and Financial Times columnist James Max has a tweet that puts it in perspective. In short, a million seconds is equal to about 11.5 days. A trillion seconds? Thirty-two thousand years.