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Apple promises blooming iPhone sales

Apple promises blooming iPhone salesApple promises blooming iPhone sales

Apple chief executive Tim Cook sought to dispel doubts on Wall Street by promising continued growth, after the group lifted iPhone sales by 22 per cent to 48m devices in the last quarter.

Boosted by an 87 per cent jump in iPhone sales in China from the same period a year ago, Apple beat analysts’ forecasts for the three months to September with earnings of $1.96 a share.

Overall revenues leapt by 22 per cent to $51.5bn in its fiscal fourth quarter, with net profits of $11.1bn, up 31 per cent. Revenues would have been 8 percentage points higher without the impact of foreign exchange, Apple said.

Total product sales in China were 99 per cent higher year-on-year at $12.5bn, although they fell 5 per cent quarter-on-quarter, amid worries about consumer demand in Apple’s most vital growth market.

But Mr Cook was dismissive of the “economic question”. He said that if he ignored external news and commentary to focus only at Apple’s own sales figures, “I wouldn’t know there was any economic issue at all in China.”
Apple promises blooming iPhone sales

“We continue to focus and invest heavily there,” he said.

Based on the level of momentum of customers switching from Android smartphones at higher numbers than before, “we believe that iPhone will grow” in its fiscal first quarter, Mr Cook said.
Apple promises blooming iPhone sales
Apple supporters cheered the results. “We view this as a relief given investors were bracing for the start of the 6S cycle to be down meaningfully, down 5-8 per cent year-on-year,” said Gene Munster at Piper Jaffray.

At Citi, analyst Jim Suva said an average iPhone sale price of $670 was above consensus estimates at $649, “underscoring our belief that purchases are at higher price point thereby driving gross margin higher”.

However, many on Wall Street remain concerned that its growth rate would slow sharply over the next year. Although Apple shares initially rose 3 per cent in after-hours trading on the release of the results, they were flat by the time the briefing concluded.

Ahead of a crucial holiday sales quarter for the new iPhones — which a year ago produced the most profitable quarter in US corporate history by Apple — the company forecast revenues of between $75.5bn-$77.5bn for the three months to December, implying year-on-year sales growth of 3-4 per cent. Gross margins would remain strong at 39-40 per cent, it added.

Luca Maestri, Apple’s finance chief, told the FT in an interview that its sales outlook would have been 7 percentage points higher in constant currency terms.

“We think this is very strong guidance, particularly on the revenue front,” Mr Maestri said. “We’ve got an extremely difficult compare in front of us. The fact that we are guiding to growth against that compare is very meaningful.”

Despite an economic slowdown in emerging markets such as Brazil, Russia and Turkey and foreign exchange translations, “we believe we will continue to grow iPhone in particular”, Mr Maestri added.

In the last quarter, Apple spent $17bn on share buybacks and dividends, using up $143bn of the $200bn in cash earmarked to give back to shareholders.

Apple does not break out sales figures for its Watch but under the “other products” segment, which includes the smartwatch alongside other accessories such as iPods and Beats Headphones, it posted a sales jump of 61 per cent over the prior year to $3bn.
Apple promises blooming iPhone sales
Apple promises blooming iPhone sales
Apple promises blooming iPhone sales

Source: Financial Times
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