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Apple On A Roll As Profits Surge 12% Shares Take Off

Apple profits have surged over 12% with shares in the Company jumping 6% after hours on strong quarterly earnings.

The Company is also signaling strong sales of the new iPhones scheduled to be released later this year.

Sales will be $49 billion to $52 billion in the three months through September Company executives said.

We were encouraged by the results this quarter, said Apple CEO Tim Cook during a conference call.

When asked during a conference call  Is the launch timing okay? What’s difference with this launch vs. historically.
He said “No comment on anything that’s not announced,” Cook says.

Talking about the impact that the China market is having on sales he said that sales were “up in mainland China by 6%”, he said. iPad helped drive that, and Services. iPhone was pretty much flat.

Hong Kong dragged down the total segment, he said. The peg to the dollar makes it tough to tell when the market will come back. Cook is encouraged by mainland China sales.

In terms of WeChat, Cook says because iOS isn’t a majority in China, the WeChat use makes switching opportunity greater. I think he means that instead of people leaving Apple for other brands with WeChat, he thinks people can leave other brands and come to iOS with WeChat.

Cook said Apple feels good about iPhone upgrades this year in terms of units, but the rate is pretty similar if you don’t count the iPhone 6 and big screen push. He mentioned the iPhone 8 pause, and that bodes well for later on.

On TV and original content: Cook mention some new content launching, and some on Apple Music. The objective is “for our own learning” since Apple is new in video space. And to give Apple Music subs some exclusive content. He dare not mention “Planet of the Apps.” Mentions Apple’s new hires who are involved in top tier programming like Breaking Bad.

New iPhones typically go on sale in mid- to late September, which produces a few weeks of revenue that are included in the company’s fiscal fourth-quarter results. Some analysts had reduced their projections on concern the new high-end iPhone may be delayed, but Apple’s latest forecast calmed those fears claims Bloomberg.

“We’ve put everything we know into coming up with the guidance,” Chief Executive Officer Tim Cook said in an interview with Bloomberg Television’s Emily Chang. “We really like what we see for the beginning of the back-to-school season.”

The company sold just more than 41 million iPhones in the quarter ended July 1, generally in line with the 41.1 million estimated by analysts, according to data compiled by Bloomberg. Revenue rose 7.2 percent to $45.4 billion compared with the average projection of $44.9 billion. Apple generates almost two-thirds of its revenue from the iPhone.

New Models

Apple is likely to introduce three new handsets this year: a revamped top model, known for now as the iPhone 8, and upgrades to the existing iPhone 7 and iPhone 7 Plus, people familiar with the plans have told Bloomberg News. The high-end iPhone will include an organic light-emitting diode screen, and inadequate OLED supplies mean that it will not be as readily available as the cheaper handsets at launch, the people said.

Cook said reporting about the new versions of the iPhone “has created a pause” in consumer buying “that is likely larger than previously.”

The company’s stock has soared to record highs on expectations that the new high-end smartphone, which will also include a front-facing 3-D sensor to enable facial recognition, will spur a resurgence in demand. Sales growth of the company’s flagship product has slowed over the past two years as the smartphone market has become increasingly saturated and competitors have offered cheaper products with similar capabilities.

The shares gained about 3 percent in extended trading after closing at $150.05 in New York.

Rising Shares

Even amid reports of impending iPhone delays, the stock has gained 30 percent this year as investors anticipate demand for the device to carry over into the Christmas quarter and beyond.

Apple reported fiscal third-quarter profit of $1.67 a share, compared with analysts’ average estimate of $1.57.

Slowing smartphone sales have prompted Apple to invest more heavily in developing new technologies. It’s working on smart glasses, an autonomous driving system, improved health and fitness offerings, and its own semiconductor technology. Research and development spending jumped 15 percent to $2.9 billion in the most recent quarter.

Apple unveiled the early fruits of its spending on augmented reality technology in June, releasing a set of tools which let developers build AR software for the iPhone and iPad when the next operating system for those devices is rolled out later this year. Cook has over the past 18 months repeatedly said how excited he is about the prospects for AR.

Cook is also preparing to release Apple’s first new hardware category since 2015. The HomePod, the smart speaker that will go on sale in December, is the company’s response to Amazon.com Inc.’s Echo and Alphabet Inc.’s Google Home speakers. Cook is hoping that advanced acoustic capabilities will encourage consumers to pay $349 for the device — almost three times as much as the Google Home.

The speaker will also serve as a bulwark in users’ homes to deliver more revenue from services. Sales in those businesses, which include Apple Music and iCloud, gained 22 percent to $7.3 billion in the quarter from a year earlier.

“The App Store continued to be a major driver of the performance and we couldn’t be happier with how the services business is growing,” Cook said.

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