Apple earnings beat expectations, stock soars
Apple (AAPL) earnings are out and it’s a beat.
Earnings per share for the iPhone maker hit $1.67 in its third quarter, higher than expectations for earnings of $1.57. Revenue came in at $45.4 billion against estimates for $44.95 billion.
iPhone sales for the quarter hit 41 million, missing expectations for sales of 41.1 million.
In after hours trading on Tuesday, shares of Apple were up more than 5%. If this move holds into Wednesday’s trade, Apple will add 54 points to the Dow Jones Industrial Average.
Ahead of Tuesday’s report, Apple shares had gained more than 28% this year, bringing its market cap to north of $770 billion making it the world’s largest publicly traded company.
Average selling price for iPhones during the third quarter was $606, which is below the $628 expected by analysts. Average selling price (ASP) is a closely-watched measure for Apple, as an increase in ASP indicates demand for the company’s higher-end smartphones, which can bolster margins.
In the third quarter, Apple’s gross margin was 38.5%, better than the 38.2% expected by analysts. During the third quarter, Apple sold 11.4 million iPads and 4.3 million Macs, up 15% and 1% from the prior year, respectively.
In its fourth quarter, Apple expects revenue to hit $49-$52 billion, more than the $49.12 billion that Wall Street analysts had forecast. This number was expected to be closely-examined by analysts, who speculated ahead of earnings that supply chain delays for Apple’s yet-to-be-announced iPhone 8 could weigh on guidance and delay shipments of the device until October.
According to data from Bloomberg, the options market was pricing in a 3.4% move after earnings, and the firm noted that Apple shares had risen after six of the company’s last 12 earnings reports.
Apple CEO Tim Cook emphasized the company’s services business again, saying in the company’s earnings release that, “we’re happy to report our third consecutive quarter of accelerating growth and an all-time quarterly record for Services revenue.” Revenue for Apple’s services business hit $7.3 billion during the quarter.
Apple’s China sales, which have been closely scrutinized of late, totaled $8 billion in the quarter, down 25% from the prior quarter and 10% from the prior year. Overall, sales outside of the U.S. accounted for 61% of revenue during the quarter.
The company’s cash pile, long a source of fascination for analysts who wonder if the company might one day make a major acquisition, grew to $261 billion in its third quarter.
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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