Apple Posts Strong Third Quarter Earnings; Cheaper iPads and Apple Watch Saved the Quarter

Cupertino giant, Apple has been achieving record revenues for years now. However, the company is now losing its momentum. Today, Apple posted its third quarter revenues ended July 1, 2017, which showed a marginal revenue growth when compared to previous years. Apple’s business revenue grew by six percent YoY, and 12 percent over the same period in 2016.

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Thanks to the cheaper iPads, Apple retained the business revenues, although, they were down. Apple reported that the iPad sales were up 15 percent from last year. This essentially means that customers are interested in cheaper iPads, rather than the costlier iPad Pro.

The company posted quarterly revenue of $45.4 billion and quarterly earnings per diluted share of $1.67. These results compare to revenue of $42.4 billion and earnings per diluted share of $1.42 in the year-ago quarter. International sales accounted for 61 percent of the quarter’s revenue.

“With revenue up 7 percent year-over-year, we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue,” said Tim Cook, Apple’s CEO. “We hosted an incredibly successful Worldwide Developers Conference in June, and we’re very excited about the advances in iOS, macOS, watchOS and tvOS coming this fall.”

“We reported unit and revenue growth in all our product categories in the June quarter, driving 17 percent growth in earnings per share,” said Luca Maestri, Apple’s CFO. “We also returned $11.7 billion to investors during the quarter, bringing cumulative capital returns under our program to almost $223 billion.”

Apple is providing the following guidance for its fiscal 2017 fourth quarter:

  • revenue between $49 billion and $52 billion
  • gross margin between 37.5 percent and 38 percent
  • operating expenses between $6.7 billion and $6.8 billion
  • other income/(expense) of $500 million
  • tax rate of 25.5 percent
  • Apple’s board of directors has declared a cash dividend of $0.63 per share of the Company’s common stock. The dividend is payable on August 17, 2017, to shareholders of record as of the close of business on August 14, 2017.

Furthermore, Apple has posted a modest iPhone and Mac sales in the same quarter. According to a FactSet StreetAccount report, Apple reported a 1.46 percent boost in iPhone sales of 41.03 million in the third quarter ended July 1, up from the 40.4 million iPhones it sold a year earlier. Further, Apple said that the Apple Watch sales were up by 50 percent, which is surprising.

Apple’s Future in China is Uncertain
Apple also revealed its China’s status for the same quarter. The company said that the revenue in all the emerging markets grew 18 percent, but in China, the Cupertino giant reported a 9.5 percent decline in sales.

“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 US. dollar,” Luca Maestri said.

This clearly states that the consumers in China are looking for a new iPhone, and no more interested in incremental upgrades. Everyone expected Apple to lose its revenue by a huge margin, but the company surprised with the report. The strong revenues also indicate that the company would launch the iPhone 8 in September itself.

Chakri is a go-to guy for your next smartphone recommendation. Back in his engineering days, he used to play with smartphones by installing custom ROMs and that passion got him into the tech industry. He still goes nuts about a smartphone knocking his door for review. Currently managing everything at Telecom Talk, Chakri is trying to master PUBG Mobile in his free time.

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