These were very good numbers from Apple with a beat on the top and bottom lines. Consumers are still extending the upgrade cycle and holding on to iPhones longer but stickyness in the Apple ecosystem remains strong.
Revenues rose 1% to $53.8bn, ahead of the $53.4bn expected. EPS was down 7% but at $2.18 ahead of the $2.10 expected.
Mac (+11%) and Wearables (+48%) offset to a degree the decline in iPhone sales. Outside of the iPhone Apple sales growth stood at a mighty 17%.
The 13% growth in Services sales is a disappointment, and represents another quarter of deceleration. However excluding a couple of one-off items the growth was more like 18%, according to Tim Cook.
The iPhone is still struggling with sales down 12%. The next refresh cycle may not offer much uplift though with 5G capability not expected until the 2020 round.
China was better thanks to a VAT cut but overall sales in Greater China were still down 22%.
Although Services revenue growth didn’t come through quite as anticipated this was nevertheless a very strong Q3 performance from Apple. Investors will be particularly impressed by robust Q4 guidance that’s ahead of the Street’s expectations. Revenues next quarter are seen between $61bn and $64bn versus expectations of $60.9bn.
Shares rallied through the important $211 level in after-hours trading. Heading into the open on Wall Street on Wednesday the stock seemed like it would open around $217. This marks a break past the big swing high from May.
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