Apple Inc.'s sales barely grew and its profit fell by 13% in its latest quarter, but the company projected revenue for the current quarter that topped analysts’ estimates. Apple’s stock jumped 4% in after-hours trading.
Fiscal fourth-quarter sales will be $61 billion to $64 billion, the Cupertino, Calif., company said Tuesday in a statement. Analysts, on average, estimated $61 billion, according to data compiled by Bloomberg.
The forecast suggests the company expects that its next iPhone lineup, which won’t be a major change from the 2017 and 2018 models, and increasing revenue from services will be strong enough to return the company to growth. Apple typically puts its new iPhones on sale toward the end of the current quarter.
“Investor expectations were pretty low going into the quarter, and the numbers beat in many segments, and the guidance was strong,” said Shannon Cross of Cross Research. “We’re seeing indication of strong product refreshes and launches as we move in to the fall and optimism around China.”
Apple reported that sales in the period that ended June 29 gained 1% from a year earlier, to $53.8 billion, beating analysts’ estimates of $53.4 billion. Net income was $10 billion, or $2.18 a share, in the fiscal third quarter, compared with $11.5 billion, or $2.34 a share, a year earlier. Analysts estimated $2.10 a share.
“This was our biggest June quarter ever — driven by all-time record revenue from Services, accelerating growth from Wearables, strong performance from iPad and Mac and significant improvement in iPhone trends,” Chief Executive Tim Cook said in the statement.
Apple shares closed down 0.4% at $208.78 on Tuesday before the report. They have gained 32% this year.
Apple is struggling with stagnant smartphone demand as people take longer to replace their gadgets and Chinese rivals such as Huawei Technologies Co. grab market share. The trade war is also denting Chinese economic growth while souring consumers there on U.S. brands.
The company made a concerted effort in the first three months of the year to revive disappointing iPhone sales, resorting to discounts, generous trade-in offers and new financing options to lure buyers. Those measures continued during the just-finished quarter.
The iPhone generated revenue of about $26 billion in the that quarter, representing about 48% of Apple’s total revenues. That marked the first time the iPhone has made up less than half of sales in several years. IPad sales totaled $5.02 billion. Mac revenue was $5.82 billion.
Services and wearables are picking up the slack.
The company said it had $5.52 billion in wearables revenue, its category for the Apple Watch, AirPods and Beats headphones. That’s an increase from $3.7 billion a year ago.
Services revenue reached $11.5 billion in the period, a quarterly record. Despite holding a glitzy launch event in March previewing four major new services, the company has managed to roll out only one so far, Apple News+, which has not been as successful as the company projected.
Cook confirmed on a conference call that a branded credit card will launch in August. Cook also said that thousands of Apple employees have been testing the Apple Card, which is a partnership with Goldman Sachs Group Inc. Those services still mostly require the iPhone.