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Healthy iPhone Sales Results In Apple Shares Sailing To Record High

Healthy iPhone Sales Results In Apple Shares Sailing To Record High
Apple Inc stocks were driven 6 percent high an all-time high in after-hours trading after the company signaled that its upcoming 10th-anniversary phone lineup is on schedule and delivered surprisingly strong fiscal third-quarter earnings.
After the company reported better-than-expected iPhone sales, revenue and earnings per share, the stock climbed above its intraday record high to $159.10.
It hit a milestone of 1.2 billion iPhones sold, Apple also said.
Since the market waits for the September launch of new iPhone models, the April-June quarter is traditionally a soft one for Apple.
But Tuesday’s results show that iPhone buyers may be less inclined than they once were to delay purchases until a new model is out. Even the much-maligned Apple Watch showed a 50 percent sales increase, service revenue continues to grow at a healthy clip, and the iPad product lines also showed unexpected strength.
Along with better touchscreen technology and wireless charging - which could come with a $1,000 plus price tag, Apple is widely tipped to adopt higher-resolution OLED displays for the latest iPhone.
September is the expected launch date of the phone.
According to Thomson Reuters I/B/E/S, while analysts on average were expecting $49.21 billion, the company forecast total revenue of between $49 billion and $52 billion for the current fourth quarter.
The forecast "makes it fairly certain that at least some new iPhone models will be released on the normal schedule,” said analyst Jan Dawson of Jackdaw Research. “That doesn’t necessarily mean all new models will go on sale then, or that they’ll all be in abundant supply, but I would think it means that at the very least the successors to the current phones will be available."
The cheaper models could dampen sales of more expensive units released closer to the holidays, if Apple releases cheaper models before the premium models in its 10th anniversary phone lineup, warned Bob O'Donnell, chief analyst at TECHnalysis Research.
Selling above analysts' average estimate of 40.7 million units, according to FactSet StreetAccount, the company said iPhone sales rose 1.6 percent to 41.03 million in the third quarter ended July 1.
But iPhone revenue was forced to come in at $24.8 billion, below expectations of $25.5 billion by a lower average iPhone selling price of $606, well below Wall Street expectations of $621.
Apple lowering the flow of inventory by 3.3 million units, which were “entirely at the high end of the range” was partly the reason for the weak price, explained Apple Chief Financial Officer Luca Maestri.
Noting a bright spot, revenue from emerging markets excluding China grew 18 percent, Apple said. But as consumers switched to newer domestic offerings, sales from the Greater China region fell 9.5 percent to $8 billion in the latest quarter.
“The decline from a market standpoint was concentrated in Hong Kong, which is a place that has been really affected by a reduction in tourism because the Hong Kong Dollar is pegged to the U.S. dollar,” Maestri said.
The issue of the company's decision to remove so-called VPN apps from the App Store in China was directly addressed by Apple CEO Tim Cook. Chinese users are helped to circumnavigate government internet restrictions by those apps.
"We would obviously rather not remove the apps, but like we do in other countries we follow the law wherever we do business," Cook said. "We believe in engaging with governments even when we disagree. This particular case, we’re hopeful that over time the restrictions we’re seeing are lessened, because innovation really requires freedom to collaborate and communicate."

Christopher J. Mitchell

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