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Apple beats sales expectations driven by iPhone sales

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Apple Inc on Tuesday reported quarterly sales and earnings that exceeded analyst expectations as consumers bought premium versions of its iPhone 5G and signed up for the company’s subscription services.

Refinitiv’s IBES data, thanks to higher-than-expected iPhone sales, generated total revenue of $ 81.43 billion (AED 300 billion), up 36.4 percent from the $ 73.30 billion analyst estimate. According to Refinitiv, earnings were $ 1.30 per share, higher than the estimate of $ 1.01 per share.

The results sparked mixed investor reactions, with shares rallying and falling slightly in the secondary market, down 0.4% after investors more than doubled their valuation of the company in about three years.

Apple’s strongest sales growth came in China, where CEO Tim Cook told Reuters that customers buy accessories like Apple Watch to pair with their iPhones.

Sales in China rose 58% to $ 14.76 billion in the third fiscal quarter ending June 26.

“It wasn’t just an iPhone. “We set a new quarterly record for Macs, wearables, home and accessories, and services,” in China, Cook told Reuters. “This was our strongest geography.” Apple also appears to have escaped a major hit so far due to global chip shortages.

The results have led investors who once worried that Apple was overly dependent on the sale of its proprietary computing device, the iPhone, which boosted the company’s value to nearly $ 2.5 trillion.

“Their top priority right now is to sustain their success to justify their $ 2 trillion valuation,” said Jesse Cohen, senior analyst at

Apple released its iPhone 12 models, each of which can connect to faster 5G wireless networks thanks to chips from Qualcomm Inc later than usual last year. As this delay pushed some iPhone purchases, which usually occurred in the company’s first fiscal quarter, into the second, executives warned investors to anticipate a sharper-than-normal iPhone sales drop in the third quarter as consumers begin to refrain from shopping in anticipation of the next generation. phones this fall.

But the push to move to 5G seems to have resulted in a better iPhone purchase cycle than many analysts expected.

Apple said iPhone sales were $ 39.57 billion, up nearly 50 percent from a year earlier and beating analysts’ expectations of $ 34 billion.

Cook told Reuters that Apple’s iPhone 12 Pro and 12 Pro Max, premium devices, were selling well. This helped boost gross margins to 43.3%, according to Refinitiv, higher than the 41.9% estimate.

Another major driving force behind Apple’s results was its services business, which includes paid TV and music subscriptions and the App Store. Service revenue hit a record $ 17.49 billion, up a third from a year earlier and beating analysts’ expectations of $ 16.33 billion. Cook told Reuters that Apple now has 700 million subscribers across multiple platforms, up from 660 million a quarter earlier.

Cook said Apple has set quarterly sales records for many of its own services, including AppleCare’s hardware insurance plans, which slowed somewhat during the pandemic, when many of the company’s outlets were closed.

But Apple has had setbacks. Apple told investors last quarter that a global chip shortage could hold back sales by $ 3-4 billion, primarily due to a shortage of secondary chips made using older technologies used in iPads and Macs.

Cook told Reuters that Apple was limited in the number of Macs and iPads it could sell due to chip shortages, but that Apple’s total deficit revenue was “below the low end” of a previously predicted range. According to Refinitiv, iPad and Mac sales totaled $ 7.37 billion and $ 8.24 billion against analysts’ expectations of $ 7.15 billion and $ 8.07 billion.

Over the long term, Apple’s services business faces regulatory risks. The company’s practice of charging 15 to 30 percent commissions from developers who sell on its App Store and requiring them to use Apple’s payment system could be subject to regulatory scrutiny in the United States and Europe, where lawmakers are also proposing laws that could cut some of Apple’s practices.

The antitrust lawsuit filed against Apple by Fortnite creator Epic Games is also expected in the coming months.

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