Apple reports $13.8B profit, despite slow iPhone sales

Delia Walker
May 3, 2018

Apple boss Tim Cook has hailed the company's "best March quarter ever" as revenues soared to more than $61bn.

Apple cheered investors last night as it promised to hand them $100 billion, boosted its quarterly dividend and hailed its controversial iPhone X smartphone as a "Super Bowl winner".

The services division continues to be one of its most lucrative, with a 31 per cent revenue growth year on year. Apple was also affected by the declining PC sales with Mac sales declining 3 percent in the second quarter of 2018 compared to same period a year ago. But again, this was down from 13.1 million on the previous quarter.

Well, amid reports that iPhone X sales have been somewhat disappointing, cumulative iPhone sales for the quarter checked in at 52.2 million units.

Regarding the third quarter, Apple issued guidance for revenue between $51.5bn and $53.5bn, and a gross margin of between 38% and 38.5%.

Apple has reported strong iPhone sales that beat analyst forecasts, and promised additional stock buybacks, the media are saying. Analysts had projected of 52.3 million, on average, although some investors expected fewer units.

Apple doesn't break down its Other Products category, so it's hard to know how its new smart speaker is doing. The decision to release three new iPhone models at once, along with the X's steep price, raised fears that consumers might not opt for Apple's top-of-the-line iPhone. However, Cook was happy to point out that sales of wearable devices jumped almost 50 percent on a year earlier, attributable at least in part to the launch of the first cellular Apple Watch toward the end of 2017. In Q2 2018, the other products revenue stood at $3.95 billion, a stronger growth compared to $2.87 billion reported during second quarter of 2017. Revenue climbed 16 percent to $61 billion.

Apple also enjoyed growth in every geographic segment, most notably posting a 21% revenue increase in China, where the iPhone X was the most popular smartphone and Apple gained market share with the Mac.

It said revenue from Americas grew 17 percent while that from Europe jumped by 9 percent.

Paid subscriptions to Apple's services surpassed $270 million, up $100 million from a year earlier, Cook said, and the wearables business, like Apple Watch, is now as large as a Fortune 300 company.

"We are returning the cash to investors as we have promised", Chief Financial Officer Luca Maestri told Reuters in an interview. "We're putting a lot of energy there and working with the carriers in that market, and they're investing enormously on the LTE networks", he added. Apple issued an increased quarterly dividend of US$0.73 per share, up from US$0.63 - unsurprisingly, its stock was up 16 percent in trading at the time of writing.

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