Apple Tops Expectations On Strengthening Services Unit

By Glenn Dyer | More Articles by Glenn Dyer

Apple has joined Microsoft, Alphabet, and Facebook among the mega techs in doing better in the three months to June than the market had been expecting.

Netflix and Amazon were the disappointments in the June reporting season for the huge tech companies.

Investors shrugged off another fall in iPhones in the quarter and more weakness in China.

Apple shares were up nearly 5% in late post session trading at 7am Sydney time after the company beat forecasts for its June (its own third-quarter) results and revealed a stronger outlook for the three months to September.

The results follow two quarters of weakness, including the first decline in iPhone sales since the launch of the device a decade ago.

The company’s services unit, including the iTunes, Apple Pay and newer initiatives in gaming, news and credit cards, saw a big rise in sales as it has become the focus of the tech giant’s future growth as hardware sales erode and consumers old on to their iPhones, Macs and other devices for longer.

Overall iPhone sales fell 17% last quarter compared with the same quarter last year, iPhone sales in China fell 22%, thanks to Trump’s trade war.

The company reported net income of $US10.04 billion down from $US11.52 billion in the June quarter of 2018.

Revenue for the quarter rose to $US53.8 billion, compared with $US53.27 billion a year earlier. FactSet consensus forecasts from analysts was $US53.32 billion.

Apple’s revenue number includes $US25.99 billion in iPhone revenue, $US5.02 billion in iPad revenue, $US5.82 billion from Macs, $US11.46 billion in services revenue, and $US5.53 billion in wearables, home, and accessories revenue.

Sales in China fell as expected but this was offset by a rise in the core Americas market. Greater China saw sales decline there, to $US9.16 billion from $US9.55 billion. Sales in the Americas rose to $US25.06 billion, compared with $US24.54 billion in the June quarter of 2018.

For the current quarter, Apple expects revenue of $US61 billion to $64 billion.

Apple’s September quarter (its 4th and final of its financial year) typically includes a short window in which the company’s latest iPhones and other products are available for sale.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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