Apple offered sceptics some proof on Wednesday that it can thrive in a future with slower growth from iPhones by posting strong sales of accessories such as watches and headphones and offering bullish guidance for the holiday season.
The California tech group reported $64bn in revenue for the three months to September 30, up 2 per cent from a year ago, even as smartphone and Mac sales both declined.
That was ahead of the median Wall Street estimate for $62.9bn. Earnings per share rose 4 per cent to a record $3.03, also well ahead of expectations of $2.84 a share. Net income, however, fell 3 per cent to $13.7bn as operating costs rose from $8bn to $8.7bn.
Tim Cook, chief executive, hailed the record revenues for the pre-holiday quarter, calling it a “groundbreaking” period “fuelled by accelerating growth from services, wearables and iPad”.
Apple gave a bullish outlook for the holiday quarter just beginning, projecting between $85.5bn and $89.5bn in sales, in line with forecasts of $86.8bn. This gives Apple a chance to beat its best-ever quarter of $88.3bn.
The forecast implies optimism for its refreshed line-up of iPhones, led by the “Pro” series with triple-lens cameras, as well as its Series 5 Apple Watch and the new noise-cancelling AirPods Pro wireless headphones.
Apple’s stock rose as much as 3 per cent in after-hours trading, returning to a high it achieved earlier this week and solidifying it as the world’s largest public company, now worth $1.1tn.
Apple repurchased $18bn of its stock in the quarter and Luca Maestri, chief financial officer, told the Financial Times he believed the company remained undervalued.
“We see great value in our stock,” he said. “Our multiples compared to some other technology companies — even compared to the market — we believe there is a lot of value there.”
Apple recorded iPhone sales down 9 per cent in the past quarter to $33.4bn. That decline was offset by growth in other categories, led by 54 per cent growth in the group’s increasingly prized Wearables division — comprising watches, headphones and other accessories — to $6.5bn.
Services, Apple’s second-largest sales driver, hit a record $12.5bn in revenues, up 18 per cent from a year ago. Mac revenues fell 5 per cent to $7bn, while iPads were up 17 per cent to $4.7bn.
Mr Cook said: “With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-cancelling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best line-up of products and services ever, we’re very optimistic about what the holiday quarter has in store.”
Some analysts remained upbeat on the company’s prospects. “Apple not only faces a lack of genuine smartwatch or wireless headphone competition, but also has strong product lines with attractive entry-level pricing available,” analyst Neil Cybart wrote in an earnings preview for Above Avalon.
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