Apple posts monster earnings report ahead of iPhone X launch

Camille Francis
November 3, 2017

"We couldn't be more excited as we begin to deliver our vision for the future with this stunning device", said Apple CEO Tim Cook about the iPhone X. Soon after people started pre-ordering the iPhone X on October 27, shipping times lengthened to as many as six weeks. That's down only slightly from the 11.4 million sold last quarter, during which Apple introduced new models of the iPad Pro.

In the past few days, several media reports have claimed that Apple is facing a huge supply gap primarily for two reasons: difficulties in assembling the new facial identification software and 3D camera, and "off the charts" pre-orders for iPhone X after the Apple fraternity didn't make the expected beeline for iPhone 8 and 8 Plus.

Apple (AAPL) posted strong fourth-quarter earnings, topping Wall Street estimates and forecasting healthy gains for early 2018.

During its most recent quarter, Apple sold 10.3 million iPads and 5.3 million Macs, representing a year-over-year increase of 14% and 25%, respectively.

Apple shares have climbed 45 percent since the beginning of the year, while the Standard & Poor's 500 index has climbed 15 percent. Shares, which closed at $168.11 per share, were up almost 3 percent after the report.

"Apple is taking the iPhone franchise to a whole new level with the iPhone X, pushing the company deep into the ultra-luxury smartphone market", Drexel Hamilton analyst Brian White wrote in a note to clients ahead of Apple's quarterly report on Thursday after the bell.

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Analysts interviewed by AFP 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.

Of the iPhone figures cited, "we believe less than 10% of that is the 8", says Daniel Ives, an analyst with GBH Tech Research.

What's emerged as the No. 2 category after iPhones for Apple is Services, which includes iTunes, Apple Music and iCloud.

Analysts expected earnings of $1.87 per share and revenue of $50.7 billion, according to FactSet. But it forecast profit next quarter, which is traditionally its largest for sales due to the holidays, for somewhere between $84 billion and $87 billion.

Apple also said it returned to revenue growth in China, bringing in $9.8 billion versus $8 billion a year ago. In a quarter that's typically the calm before the holiday storm, Apple has to be happy with these results.

The Cupertino, California-based company said it had net income of $2.07 per share.

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