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Apple Q4 earnings: 46 million iPhones sold and services business sets new record

Apple says ASP for iPhones increased from $618 a year ago to $793 during the fourth quarter of 2018.

  • Published: November 2, 2018 9:02 AM IST
Apple Tim Cook 805px

Image credit: Apple

Apple announced its fourth fiscal quarter earnings and as expected, the services division continues to outshine all other forms of revenues. During the fourth quarter, which ended on September 29, 2018, Apple generated revenues of $62.9 billion, an acceleration of 20 percent over the same period last year. Apple says international sales accounted for 61 percent of the quarter’s revenue.

During the quarter, Apple announced revenue of $10 billion from the services division, which includes App Store and Apple Music. This is the biggest revenue yet from services business for Apple, and the company says it accounted for an increase of 27 percent. With every quarter, Apple seems to be outdoing itself in the services business as iPhone and iPad users spend more on the App Store and more consumers join Apple Music, a streaming music platform available on iOS, macOS, Android and Windows.

“For services, it was our best quarter ever with revenue at $10 billion. We set new Q4 records in all of our geographic segments and new all-time revenue records for the App Store, cloud services, AppleCare, Apple Music and Apple Pay. We also continued to see strong growth in paid subscriptions reaching over 330 million in our ecosystem,” Apple CEO Tim Cook said during the earnings call.

During the quarter, Apple said it sold 46.8 million iPhone to generate revenues of $37 billion, an increase of 29 percent over the same period last year. Apple did not see a huge jump in iPhone sales but the higher starting price of models like the iPhone X and newly introduced iPhone XS, iPhone XS Max shows the strategy is working in its favor. Apple said iPhone ASP was $793 during the fourth quarter, up from $618 a year ago.

Apple also revealed that it had sold 9.69 million iPads and 5.29 million Macs during the fourth quarter, and generated revenues of $4 billion and $7.4 billion respectively. There is no word on how many Apple Watch or AirPods or HomePods it sold during the quarter but revenues from other products came in at $4.2 billion.

Apple also announced that it will stop sharing unit sales for iPhone, iPad and Mac from next quarter. For Apple, it was about number of iPhones sold during a quarter and now it is shifting towards revenue it generates from the business. With ASP rising every quarter, Apple’s investors would be better served with revenue numbers than number of devices sold during the quarter.

Watch: Apple iPhone XS, iPhone XS Max Hands-On

During the fiscal 2019 first quarter, Apple is providing revenue guidance between $89 billion and $93 billion. This is strongly indicative of demand for new iPhone models, especially the cheaper iPhone XR with design similar to that of the iPhone XS. Apple is also suggesting gross margin between 38 percent and 38.5 percent for the next quarter.

The fourth quarter results do not paint rosy picture about Apple’s business, like it did in the past. Rather, it is clear that Apple stands to make more money by selling less number of devices than it has done in the past, due to increased starting prices of iPhones, iPads and Macs. However, the global currency fluctuation and increased competition from Chinese brands like Huawei will continue to hurt the company’s prospects in emerging markets.

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  • Published Date: November 2, 2018 9:02 AM IST