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Apple: iPhone sales are down (but they've never been more lucrative)

Mac also slips in Q1, but revenues don't feel a thing

Apple on Thursday touted its highest-grossing quarter ever, even as iPhone and Mac shipments were down.

CEO Tim Cook made a point of singling out strong iPhone X and iPad sales, while glossing over slowed Mac sales. For the quarter ending December 30, Apple's first of its fiscal 2018:

  • Revenues of $88.2bn beat out analyst estimates of $87.5bn and were up 13 per cent on the year-ago quarter.
  • Net income of $20bn was up 11 per cent from $17.9bn in Q1 2017.
  • Earnings per share of $3.89 beat analyst estimates of $3.86 and were up 16 per cent on the year-ago quarter.
  • Apple moved 77.3 million iPhones in the quarter, good for $61.58bn in revenues. Despite a slight decline in unit sales (from 78.3 million) from the year-ago quarter, revenue was up 13 per cent, thanks in large part to the $1,000 iPhone X price tag.
  • Mac sales and revenues were down five per cent, as Apple sold 5.1m Macs on the quarter.
  • iPad moved 13.1m units last quarter, up six per cent and the third straight quarter of growth for the tablet line.
  • Services – like iTunes, App Store, and Apple Pay – netted $8.5bn during the quarter, up 18 per cent.
  • "Other products", a group that includes AppleTV and Apple Watch, made $5.5bn, up 36 per cent on the year-ago quarter, mainly due to Watch healthy sales.

Cook hailed the iPhone X, which helped boost revenues despite what some analysts had considered lukewarm sales.

"We feel fantastic about the results," Cook said of his expensive new handset. "It has been the most popular iPhone every week since its launch."

While Cook shied away from telling analysts on a conference call any plans Apple has for the coming year, he did make a point of talking up augmented reality (AR), suggesting it would be a key area of focus for iOS devices going forward.

"I see AR as being profound," Cook said.

"AR has the ability to amplify human performance instead of isolating humans. We put a lot of energy in AR."

Well, while it's concentrating on AR, it won't be adding many new features to iOS 12, apparently: that next major release will be mainly stability fixes and bug squashing, and pushing back new shiny-shiny features.

Unlike many of its peers, Apple did not take a big financial hit from repatriating money kept overseas (currently around 90 per cent of Apple's cash is stored outside of the US). Execs say they will give details on their plans to bring money back to the US next quarter.

Apple shares were up 3.1 per cent to $173.04 apiece in after-hours trading. ®

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