Apple Beats Quarterly Earnings Expectations
Apple sold 50.8 million iPhones, while analysts predicted about 52 million sold.
Apple beat expectations Tuesday by reporting that it earned $2.10 per share in its fiscal second quarter, but missed on revenue of $52.9 billion in results released after the market close.
Wall Street analysts were expecting Apple, which is led by CEO Tim Cook, to earn $2.02 a share, up 6 percent year-on-year, on $52.97 billion in revenue, according to a Thomson Reuters consensus estimate.
The company posted net income of $11.03 billion, up from $$10.5 billion for the same period of 2016. Cook in a statement ahead of an analyst call pointed to "continued robust demand" for iPhone 7-Plus.
Apple still missed on its smartphone sales. The company sold 50.76 million iPhones during the second quarter, while analysts predicted about 52 million sold.
iPhone revenues during the latest quarter were $33.2 billion, against a year-earlier $32.8 billion. "We feel great about this performance," Cook told analysts during a conference call, as he reported iPhone sales were in line with expectations.
At the same time, Cook pointed to consumers delaying iPhone purchases in anticipation of new product lines. "We're seeing what we believe to be a pause in purchases of iPhones which we believe are due to the earlier and much more frequent reports about future iPhones. That part is clearly going on and what's going on behind the data," he told analysts.
Apple also sold fewer iPad units than the year-ago period. Services — which also includes iTunes, Apple Pay, and other content and licensing businesses and represents opportunities for future growth — saw revenue rise 18 percent to $7.04 billion.
"We're happy to see the deep level of customer engagement with all of our services," Cook told analysts about the Services segment. The Other Products category, which includes Beats, Apple TV and Apple Watch, saw revenue rise 31 percent to $2.87 billion. The company doesn't break out Apple TV sales.
Apple saw overall revenues from China, where much of its product is made, fall 14 percent to $10.7 billion, in part because of a foreign exchange headwind. Cook said fewer iPhone sales in China was offset by growing retail store and Services segment revenues.
"I continue to believe there's an enormous opportunity there," the Apple boss added about China. Americas' revenue rose 11 percent to $21.1 billion, while European revenues were up 10 percent to $12.7 billion.
Cook also talked up the Apple Watch product. "The watch hasn't been out there that long ... So we feel really great about it," he told analysts, without making an predictions about future smartwatch sales volume.
Stock in Apple rose Tuesday, having reached a new all-time high at $147.98 per share earlier in the day, before closing at $147.51 on the NASDAQ Exchange. Shares then fell just over 2 percent to $144.36 in after-hours trading as investors reacted to the iPhone sales miss.
May 2, 6 p.m. ET Updated with comments by Apple CEO Tim Cook to analysts during a conference call following the release of the second quarter results.