Apple still on top

This article was written by Maria Fenech, CCIM Intern, Calamatta Cuschieri

While Apple enthusiasts await the new iPhone, it has not stopped customers from buying Apple products but rather increased sales across the globe.

Apple, one of the largest technological giants, released its third quarter results that sky rocketed past analysts’ lower adjusted numbers. To be specific, the company was expected to report a 10.7% jump in EPS and a 6% jump in revenue from the previous year. Yet the figures reported a 17% increase in EPS and a 7% increase in revenue – another quarter of accelerating growth and all-time record.

Despite mediocre expectations ahead of the iPhone 8 release, iPhone sales increased to 41 million with a reduction in inventory by 3.3 million. iPad shipments also saw a 15% increase as demand was strong from both the enterprise and education channel.

Following the outstanding results, Apple’s shares popped by more than 5% after hours reaching a record high of $157.

The outlook the company has for September consists of:

• revenue between $49 million and $52 million

• gross margin between 37.5% and 38%

• operating expenses between $6.7 billion and $6.8 billion

Apple’s guidance of a high revenue relates to the new iPhone as well as other products that are to be released and materially affect September figures. The OLED “iPhone Pro” is expected to marginally affect December figures due to its estimated launch in mid-September.

Although the company’s figures reported well above expectations, analysts are more focused on when the new iPhone 8 will be released. Andy Hargreaves, senior research analyst at Pacific Crest Securities, suggested that the final quarter results will be more valuable than the results already published. He further added that stronger-than-expected results could be an indicator that consumers are not holding off purchases to wait for the new iPhone.

That being said, the guidance on future margins and revenue might still not be an impetus for investors because the new iPhone is set to be made from tricky material that might delay its launch and supply.

Besides that, the company also faces challenges in places such as China where sales fell by 10% this quarter and 14% in the previous quarter. Competitors such as Xiaomi and Huawei added pressure to Apple’s market share.

In conclusion, although Apple faces the aforementioned obstacles, analysts highly believe that the company will outperform the market and recommend a strong buy.