Apple in touching distance of $US1 trillion mark after profits jump

Apple in touching distance of $US1 trillion mark after profits jump

Apple sold 41.3 million iPhones in the quarter that ended June 30, just shy of the 42 million figure anticipated by analysts. The results surpassed Wall Street expectations of $2.17 per share, the Associated Press reported. Buffett's company Berkshire Hathaway purchased nearly 75 million shares of Apple earlier this year. Apple stock rose 2.5% in after hours trading Tuesday following the earnings report.

The firm said it sold 41.3 million iPhones in the three months to the end of June, up just 1% from past year. Apple (NASDAQ:AAPL) sold a total of 41.3 million iPhone units, but the projected amount was 41.6 million units. Its mobile unit reported a 22 percent drop in sales revenue to $20.2 billion from the same time previous year.

Apple, the maker of the iPhone X, exceeded Wall Street's expectations with its latest earnings, partly due to selling pricier mobile phones. In a note ahead of earnings, Andy Hargreaves of KeyBanc Capital Markets said that the "the risk of a direct impact from trade conflicts or increased nationalism among foreign consumers that damages worldwide iPhone demand" might offset potential gains for Apple. During the conference call, Cook noted that the iPhone X was the most popular iPhone in the third quarter. Sales in that sector rose 31 percent to $9.5 billion. Many Americans have at least one piece of Apple tech in their household, and the same can be said for residents of European and Asian countries.

Despite the beat, James Cordwell, an analyst from Atlantic Equities, said the high selling prices might cause investors some concern because "there's a limit to how much Apple can grow the iPhone franchise by pushing pricing".

Apple's revenue guidance for Q3 2018 fell between $51.5 billion and $53.5 billion, with gross margin estimated to be between 38% and 38.5%. Of course, the iPhone still pulled down almost $30 billion in total revenue, but Services has rapidly grown from a minor segment of Apple's business to a major component.

Cook said the number of people using Apple devices is surging, and that promised to keep fuelling the strong growth seen at its streaming music, digital wallet, and App Store.

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.

The iPhone maker's market capitalisation is just under $950 billion United States dollars, meaning it would need stock prices to rise around 7% to pass the trillion-dollar mark.

Analysts have learnt to look past Apple's third-quarter earnings to avoid any disappointment as consumers await the next iPhone upgrade, which is expected in September.