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Apple’s iPhone X keeps selling as Q3 services revenue soars

Published: August 1, 2018

The company also projected better-than-expected revenue in the fourth quarter, indicating good times ahead for its new iPhones.

By Shara Tibken | 31 Jul 2018

People just kept scooping up Apple’s iPhone X.

The company said Tuesday it sold 41.3 million iPhones in its fiscal third quarter. That performance isn’t bad for a gadget that’s been on the market for roughly six months, though it missed the consensus estimate of 41.8 million units, according to Toni Sacconaghi, an analyst with Sanford C. Bernstein. By comparison, the company sold 41.03 million iPhones in the same quarter a year earlier.

“We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” Apple CEO Tim Cook said in a press release. He noted that strong iPhone, services and wearables sales boosted results.

“We are very excited about the products and services in our pipeline,” Cook said.

While iPhone unit sales weren’t quite a blowout, Apple’s forecast for fourth-quarter revenue topped analysts’ expectations, as did its third-quarter sales and per-share earnings. A stronger-than expected fourth quarter indicates Apple has big ambitions for its next iPhones. And in a quarter that’s usually pretty boring, Apple had plenty of highlights to share.

“This was the most exciting quarter from Apple in quite some time,” Michael Obuchowski, chief investment officer of Apple investor Merlin Asset Management. “The success of Apple’s transition from a device to services company was undeniable.”

Apple shares climbed 3.6 percent to $197.14 in after-hours trading.

Cook sounded an optimistic tone during a call with analysts, pointing to everything from iPhone sales to AirPods. He noted that the third-quarter revenue rise was Apple’s “seventh consecutive quarter of accelerating growth, our fourth consecutive quarter of double-digit growth and our strongest rate of growth in the past 11 quarters.”

Cook has been pushing to expand Apple beyond the iPhone, but the company still gets most of its money from the popular smartphone. In the second quarter, it sold 52.2 million iPhones, which accounted for 62 percent of sales. (Services, Macs and iPads and “other products” like AirPods contributed to the rest of revenue). But Apple surprised almost everyone that quarter by reporting strong results despite fears that slowing demand for smartphone had finally caught up to the Cupertino, California, company.

When it comes to the fiscal third quarter, which covers the three months that ended June 30, Apple usually gets a pass. It’s Apple’s smallest in terms of contributing to annual sales, and by the time the period ends each June, Apple’s newest iPhones are already nine months old. Case in point: the iPhone 8 and iPhone 8 Plus were introduced in September 2017.

This time around, things were a little different because Apple started selling its flashiest, highest-end device — the iPhone X — about six weeks after the 8 and 8 Plus hit the market.

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