Apple shakes off worries about weak iPhone sales

Phillip Butler
November 3, 2017

Apple said it expects revenue of $84 billion to $87 billion for the first three months of 2018, which would be a record quarterly sales and indicate healthy consumer demand for its latest iPhone lineup.

Growing iPhone sales contributed to earnings beat for the company, with Apple surpassing both revenue and profit estimates of analysts.

"Apple's year-over-year revenue growth rate accelerated for the fourth consecutive quarter and drove EPS growth of 24 percent in the September quarter", said Luca Maestri, Apple's chief finance officer. The real question is: Can Apple fulfill demand, or will sales be hampered by previously-reported supply chain issues?

When Apple unveiled the $999 iPhone X in September, it also introduced the iPhone 8, which is $300 cheaper and a more modest upgrade to the prior handset.

Apple's revenue guidance for Q4 2017 fell between $49 billion and $52 billion, with gross margin estimated to be between 37.5% and 38%.

The iPhone X comes a decade after the original iPhone, the product that powered Apple's rise to become the world's biggest technology company with a market capitalization of $862 billion.

The current six-week waiting time for online iPhone X orders will be reduced in the next two days as Apple adds more production capacity, he added. Analysts, who have already factored in the supply challenges, expected $85.2 billion, according to FactSet.

The iPhone 8 and iPhone 8 Plus went on sale in October, boasting improvements to the camera and the addition of wireless charging.

Apple's market capitalization of about $868 billion makes it the world's most valuable publicly traded company.

A larger queue formed around Apple's Sydney store for the iPhone X than the iPhone 8, released last month. It competes with a range of revamped Echo speakers from Inc. and Google's Home devices.

"What Apple needs to do is manage consumer expectations so they don't get frustrated having to wait for so long for a new phone", Ives said. Sequentially iPhone unit sales are up 14%, as is to be expected. That represented 25 percent growth from the same period a year earlier when sales were $5.74 billion.

But in its most recent quarter, the strongest growth in hardware sales for Apple came from a surprising place: Mac laptops and desktops.

The innovation may prove an important step on the path to Apple's potential next big product, smart glasses, for which CEO Cook has created a dedicated team.

Other reports by Ligue1talk

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