Apple sold more iPhones than
Wall Street expected in the third
quarter and estimated its revenue
in the current period would top
many analysts’ targets, soothing
fears that demand for the
company’s most important
product had hit a wall.
Its shares rose 7% in after-hours
trading.
The world’s most valuable
publicly traded company said it
sold 40.4m iPhones in the third
quarter, down 15% from the year-
ago quarter but slightly more
than the average analyst forecast
of 40.02m.
iPhone sales dropped for the
second straight quarter, pushing
down Apple’s total revenue
14.6% in the fiscal third quarter,
ended 25 June.
Demand for Apple’s phones has
waned in China, partly because
of economic uncertainty there,
and has also slowed in more
mature markets as people tend to
hold on to their phones for
longer.
The sales slump has stoked
concerns about whether the tech
leader can continue to deliver
profits at the level Wall Street
has come to expect.
“China was a major letdown,”
said Patrick Moorhead, an
analyst at Moor Insights &
Strategy.
“Samsung and Huawei are much
more competitive now than a
year ago and the Chinese
economy is not doing well at all.”
Mr Moorhead said, however, that
increased services revenue –
which includes the App Store and
iCloud – was a “very big bright
spot for Apple.”
Chief Financial Officer Luca
Maestri told Reuters in an
interview that Apple’s
performance had topped his
expectations in a quarter weighed
down by tough foreign exchange
rates and difficult comparisons
with blockbuster iPhone 6 sales
from the previous year.
Apple reduced channel inventory
by $3.6 billion, exceeding the $2
billion expected reduction,
meaning sales were better than
they appeared, Mr Maestri said.
Customer demand “was better
than what is implied in our
results and better than we had
anticipated,” he said.
Sales of the iPhone fell last
quarter for the first time since the
gadget’s release in 2007,
dropping 16.3%.
Mr Maestri projected the gadget’s
average selling price to rise in the
September quarter.
The iPhone drives about two-
thirds of Apple’s total sales.
Apple Chief Executive Tim Cook
said during a call with analysts
that the iPhone SE, a cheaper,
four-inch (10 cm) phone released
this year, was extending the
range of people able to buy
Apple phones.
“It’s opening the door to
customers we weren’t reaching
before,” he said.
Apple’s quarterly net profit fell
27% to $7.8 billion, while
revenue of $42.36 billion beat
analysts’ average estimate of
$42.09 billion.

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