AAPL Apple Inc

By Tripp Mickle 

Apple Inc.'s move to jack up prices on its flagship iPhone helped deliver record quarterly revenue and profit, but the company projected weaker-than-expected sales for the current quarter that adds to questions about the sustainability of demand for the technology giant's most important product.

Sales of the iPhone X -- released in November at a starting price of $1,000 -- lifted the average iPhone selling price and helped drive smartphone revenue to a record $61.58 billion for the three months through Dec. 30, up 13% from a year earlier, Apple said on Thursday. However, Apple said the number of iPhones it sold actually fell 1% to 77.3 million units.

Total revenue rose 13% to $88.29 billion in the quarter, which was a week shorter than the same period a year earlier, while profit rose 12% to $20.07 billion.

The revenue boost from the iPhone, which accounts for more than two-thirds of sales, was complemented by increased revenue from iPads and from Apple's services business, including its App Store sales and its music and payment services. Apple also benefited from strong sales of its smartwatch and AirPods wireless earbuds during the Christmastime shopping season, which lifted revenue for its "other products" unit.

Apple said it expects revenue between $60 billion and $62 billion for the current quarter. That would represent a rise from a year earlier, but is well below analysts' recent consensus estimate of $66.54 billion, a number that had fallen over the past several weeks as analysts lowered estimates on concerns about demand for the iPhone X and uncertainty around the new iPhone 8 and 8 Plus models launched in September.

Apple's shares rose nearly 3% to $172.50 in after-hours trading.

In an interview, Chief Financial Officer Luca Maestri said the X model has been the best-selling of Apple's iPhones since its release. "We're really, really happy with the way it's going," he said.

Mr. Maestri said Apple will discuss specific plans for its pile of overseas cash when it reports results for the current quarter, which runs through March. But he said Apple's goal is to target a "net cash neutral" position over time, compared with the large gap between its current holdings of $285 billion in cash and $122 billion in debt.

"We can now really look at a more optimal capital structure for our company," Mr. Maestri said.

Apple's share price soared more than 45% last year as many investors bet that the feature-rich X model, launched to commemorate the iPhone's 10th anniversary, would reignite the kind of boom in sales that recent models have failed to deliver. At an unveiling event in September, Apple marketed the iPhone X as the smartphone of the future and touted its improved display and facial-recognition system.

Apple doesn't break out for shipments by model, but analysts have said that sales of the X are softer than the company anticipated. Canalys, a market-research firm, estimated before Thursday's results that Apple shipped 29 million units of the iPhone X in the three months through December, about 6 million fewer than it says the company targeted for production during the period. It said shipments were generally lower than the company's projections because some consumers are choosing less-expensive iPhones.

Stephen Fleming, a 55-year-old education administrator in Tucson, Ariz., said he preferred to save about $200 by buying an iPhone 8 Plus, which was released in September. "I could have easily bought the X but there was nothing about the X that said: I have to have this thing," said Mr. Fleming.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

February 01, 2018 17:44 ET (22:44 GMT)

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