On Thursday, Apple reported first-quarter earnings per share of $3.89 on revenue of $88.3 billion. Both numbers beat consensus analyst expectations of $3.86 and $87.2 billion, respectively.
Apple also reported iPhone unit sales of 77.3 million. While that number came up short of consensus estimates of 80 million units, the stock showed little initial reaction to the miss after several analysts had recently predicted even weaker iPhone numbers. Apple may have sold fewer iPhones than expected, but its average sales price on phones was $796, well above consensus estimates of $756.
Looking ahead, Apple is anticipating second quarter revenue of between $60 billion and $62 billion and gross margins of between 38 percent and 38.5 percent. Analysts had been expecting revenue of $65 billion on gross margins of 38.9 percent.
“iPhone X surpassed our expectations and has been our top-selling iPhone every week since it shipped in November,” CEO Tim Cook says in a statement. “We’ve also achieved a significant milestone with our active installed base of devices reaching 1.3 billion in January.”
Apple’s Services revenue was up 18 percent to $8.5 billion in the first quarter, and Albion Financial chief investment officer Jason Ware says Services revenue is the key to Apple’slong-term future.
“It’s an iPhone company with this long-run path toward Services growth, and Services have been growing at about 25 percent for some time and carries a lot higher margins than the iPhone business,” Ware said on CNBC. “That slight miss there will require a bit of digging on our part, but it’s been certainly one of the legs of the stool for our bullish thesis on Apple’s stock.”
Gerber Kawasaki analyst Ross Gerber says all of the recent analyst reports of iPhone weakness were much ado about nothing.
“I guess all that analyst garbage was garbage and they sold a perfectly fine amount of phones,” Gerber says. “Earnings were good. They’re…
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