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Apple iPhone X expected to drive strong rise in profits
Apple is expected to unveil its biggest rise in profits since late 2015 with third quarter results set to hit $52.9 billion, boosted by pricier iPhones and strong sales from its lucrative app store and services business.
Analysts and mobile industry sources expect investors in the Silicon Valley giant will enjoy another quarter of significant year-on-year growth when the group reports its quarterly results on Tuesday night.
Some estimates suggest as much as 37pc growth in earnings per share. It was only last quarter that Apple broke its own record for the biggest quarterly profit of all time, despite a fall in iPhone sales.
The technology giant sold 52.2m iPhones in the second quarter of 2018, up by 2.9 pc from 50.6m in the same quarter the previous year, with the higher price of the new handsets meaning revenues from selling iPhones rose.
The high price tag for the iPhone X, costing up to £1,149 and the iPhone 8, up to £799, should buffer any further drop in sales, analysts predict.
Insiders said that Apple’s services, made up of the App Store, Apple Music, iCloud, iTunes, Licensing, Apple Care and Apple Pay could soar 19pc, cementing Apple as a bona fide software company.
Apple’s sales and earnings are typically lower in the third quarter prior to the arrival of new phone models which are usually unveiled at a glitzy conference in California in September, live streamed to millions around the world. But Guggenheim Partners estimated that it will hit a 4pc increase in sales in comparison to the same period last year.
The promising figures are shrouded somewhat by figures from Gartner that suggest worldwide smartphone sales declined for the first time in 2017 and growth could be cooling across the industry.
Analysts will use Tuesday’s earning call to grill Tim Cook, Apple’s chief executive, on how the company will evolve in a maturing smartphone market where the pace of innovation has slowed.
Apple’s failure to sell cheap phones to foreign emerging markets like India might become “an issue”, Gartner smartphone specialist Annette Zimmerman told the Sunday Telegraph.
“Apple has not grown in any emerging markets because they don’t have a low end device,” she said.
“I don’t see them wanting to take that seriously and that that might become an issue”.
Markets like India are hungry for cheaper smartphones. Korean rival Samsung is well positioned to offer cheaper handsets with its wide portfolio of smartphone models, as they scramble for international growth while pitted against new Chinese players Huawei, Oppo and Xiaomi.