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Apple Inc.’s (AAPL) sales grew very little, and its profit fell by 13% in its latest quarter. The company however projected revenue for the current quarter that topped analysts’ estimates. Apple’s stock jumped 4%.
Apple (AAPL) finally announced long-awaited financial results for its fiscal 2019 third quarter ended June 29, 2019. The Company posted quarterly revenue of $53.8 billion, which is an increase of 1 percent from the last year’s quarter, and quarterly earnings per diluted share of $2.18, down 7 percent. International sales accounted for 59 percent of the quarter’s revenue.
Even though iPhone revenue continued to shrink ($25.99 billion vs. $26.54 billion) company broke Wall Street’s muted financial expectations with strong results from Macs, wearable devices, and other businesses. Revenue was, therefore, $53.8 billion and analysts were looking for $53.4 billion.
Tim Cook, Apple’s CEO said that this was their biggest June quarter ever, driven by all-time record revenue from services, accelerating growth from wearables and strong performance from iPad and Mac.
He tried to be cheerful saying:
“These results are promising across all our geographic segments, and we’re confident about what’s ahead. The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.”
He also spoke about improving business conditions in China, which accounts for 17% of Apple’s business, saying that there are several things going on there that are quite positive. He continued citing a Chinese government economic stimulus and growth in its app store business in China.
The truth is, even though Apple’s business remained weak in China and was also down from a year ago in Europe, it gained in Japan and the rest of Asia Pacific. Quarterly revenue in the Americas was up slightly from 2018.
Cook also mentioned that the acquisition of Intel’s modem business represented Apple’s second biggest purchase in dollar terms and, at 2,200 employees, its largest intake of personnel. He added that it was part of the company’s strategy to “own and control” all of the key technologies in its products.
Luca Maestri, Apple’s finance chief commented that obviously on the iPhone, they’ve gone through a period where they’ve seen some revenue declines. He added that their year-over-year business performance improved compared to the March quarter and drove strong operating cash flow of $11.6 billion. Apple returned over $21 billion to shareholders during the quarter, including $17 billion through open market repurchases of almost 88 million Apple shares, and $3.6 billion in dividends and equivalents.
“But we are very excited about our product road maps, and we’re very optimistic about the future.”
Apple (AAPL) stock did rise 4% in after-hours trading Tuesday. Wedbush Securities analyst Daniel Ives said they would call this quarter/guidance as a major “feather in the cap for the bulls that should drive the stock to new highs over the coming months despite many peers yelling fire in a crowded theater … over the past few months”. He also maintained an outperform rating and $235 price target.
Shannon Cross of Cross Research said that investor expectations were pretty low going into the quarter, and the numbers beat in many segments, and the guidance was strong.
“We’re seeing indication of strong product refreshes and launches as we move in to the fall and optimism around China.”
Apple bought back 88 million shares during the last quarter. The June quarter balance sheet shows 4,531,395,000 shares outstanding, which is down 223.6 million shares since the end of the September 2018 fiscal year. At $220.68 a share, Apple will hit $1 trillion in market cap again. AAPL stock in late trading Tuesday was still below that level, at just over $217.35, giving it a market cap of about $983 billion.