Economy

Services drove Apple’s best third quarter ever, but iPhone sales aren’t growing

Services drove Apple’s best third quarter ever, but iPhone sales aren’t growing

Apple sold 41.3 million iPhones, slightly below the 41.8 million units that analysts expected.

Sales of the iPad were flat year-over-year, moving 11.5 million units, while Mac sales were down 13 percent, with only 3.7 million sold. The 6.5-inch version has been called the iPhone X Plus and will likely be the most expensive phone in Apple's lineup at a reported price of $999.

However, analysts said that a more relevant picture of Apple's health won't come until September with the launch of three new iPhone models, including a large-screen iPhone X, a more affordable model with a lower cost LCD display and a number of ancillary products.

The company's services business - which includes the App Store and Apple Music streaming service - has also been a good performer in recent quarters and another strong performance in the latest results could also help drive growth. Apple also regained growth in China, where sales rose 19 percent. Services reached a record $9.55 billion, and is well on the way to a runrate of $14 billion per quarter by 2020, the company said.

The company says it expects to report between $60 billion and $62 billion in revenue next quarter, and that it expects to pay roughly 15% in taxes on it. With a market capitalization of US$938.7 billion at market close on Monday, Apple is tickling at the title of world's first trillion-dollar company. Samsung's performance underscored mounting concerns that Apple, too, would be victimized by a saturated smartphone market. At almost $10 billion (let's just round for convenience), Services is making up almost 20% of Apple's $53.3 billion in total revenue.

Luckily, a long-underappreciated Apple division is coming to the fore: Services. Buffett's company Berkshire Hathaway purchased nearly 75 million shares of Apple earlier this year.

Apple's biggest selling products do not yet face duties stemming from the U.S. The category includes AirPods headphones, the Apple Watch, Apple TV, and the HomePod.

"We are not able to catch up to demand yet and continue to add capacity for the AirPods", Mr Maestri said.

Apple said it expects operating expenses of US$7.95 billion to US$8.05 billion in the fourth quarter, compared with analyst estimates of $7.8 billion, according to Thomson Reuters I/B/E/S.

The results "were driven by continued strong sales of iPhone, Services and Wearables, and we are very excited about the products and services in our pipeline", Tim Cook, Apple's chief executive officer, said in a statement.