Apple delivers higher profit as iPhone X launches
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Apple profits rose on the back of strong iPhone sales in the past quarter, with the U.S. tech giant on Thursday shrugging off the lofty price of its new flagship iPhone X and predicting a stellar holiday season.
“The iPhone X orders are very strong; we couldn’t be more excited to get underway,” Apple chief executive Tim Cook said during a quarterly earnings call.
“A few minutes ago the first sales started in Australia; several hundred people were waiting at the store in Sydney and there are similar reports across that region.”
Cook added that Apple is working to increase iPhone X output to catch up to demand. The wait time for online orders stretched to an unprecedented six weeks shortly after Apple began taking orders last month, but it remained unclear whether demand or supply factors were the cause.
Net profit rose 19 percent from a year ago to $10.7 billion in the fiscal fourth quarter to September 30, Apple said. Revenues were up 12 percent to $52.6 billion.
Release of the earnings figures pushed Apple shares up more than two percent to $172.54.
Apple sold more iPhones, iPads and Mac computers than it did in the same quarter a year earlier. Smartphones sales climbed by about a million units to 46.7 million in the three months winding up the California company’s fiscal year, according to the earnings report.
“We’re happy to report a very strong finish to a great fiscal 2017, with record fourth quarter revenue, year-over-year growth for all our product categories, and our best quarter ever for services,” Cook said.
“We’re looking forward to a great holiday season.”
Apple closed out its fiscal year posting a full-year profit of $48.35 billion, up 5.8 percent, on revenues of $229 billion, a rise of 6.3 percent from the previous year.
In the latest quarter Apple was able to reverse its fortunes in China, boosting overall sales by 12 percent in the “Greater China” region. Sales were up in other regions except for Japan, which saw an 11 percent revenue drop.
Analyst Patrick Moorhead, of Moor Insights & Strategy, said “Apple crushed” with a strong quarterly report showing improvements in all product categories and a 34 percent jump in services revenue.
“A few minutes ago the first sales started in Australia; several hundred people were waiting at the store in Sydney and there are similar reports across that region.”
Moorhead said concerns that iPhone sales would weaken as customers awaited the newest device were unfounded.
“Apple managed to thread the needle on iPhone sales between the giant interest in the iPhone X and what the company had to ship, which was iPhone 7 and 8,” he said.
Ambitious goal
With the iPhone X launching Friday in about 50 markets around the world, Apple is setting the ambitious goal of reinventing the smartphone as it strives to fend off fierce competition from rivals, especially in China.
The flagship handset marks the 10th anniversary of the first iPhone release.
The iPhone is the main profit driver for Apple, accounting for more than half its revenues, and is the cornerstone for the ecosystem of other devices and services.
Apple upped the ante by boosting the starting price of the iPhone X to $999 for U.S. customers, a price which will be higher in other markets and with extra options.
When asked about the high price during the earnings call, Cook pointed out that the iPhone line has models costing much less than the 10th-anniversary version.
“We tried hard to have an iPhone that is as affordable as possible for people who want an iPhone but have a more limited budget,” Cook said.
“This is the first time we have had three iPhones new at the top of the line at once, so see what happens. We are bullish.”
Two iPhone 8 models were released in September.
Cook has described the iPhone X as the future of the smartphone, packed with technology including facial recognition, cordless charging and an edge-to-edge screen made of organic light-emitting diodes used in high-end televisions.
Analysts interviewed see signs of strong demand for iPhone X, perhaps fueled by the company’s famously devoted fans who have shunned freshly released iPhone 8 models to wait for the 10th anniversary device.
Questions & Answers
Q.What was Apple's total net profit for the fiscal year that just ended?
What was Apple's total net profit for the fiscal year that just ended?
Apple posted a full-year profit of $48.35 billion, an increase of 5.8 percent from the previous year. Total revenues for the fiscal year reached $229 billion.
Q.Which geographical region saw a decline in Apple's sales during the latest quarter?
Which geographical region saw a decline in Apple's sales during the latest quarter?
Sales were up in most regions, but Japan experienced an 11 percent revenue drop. Conversely, the "Greater China" region saw an overall sales boost of 12 percent.
Q.What reason did CEO Tim Cook give for the high price of the iPhone X?
What reason did CEO Tim Cook give for the high price of the iPhone X?
Tim Cook noted that Apple also offers iPhone models at much lower prices for customers with a more limited budget. He highlighted that it is the first time three new top-of-the-line iPhones have been available simultaneously.
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