Apple revenue, profits beat expectations on iPhone sales but services miss targets

Apple earlier on Thursday reported sales and profits in the June quarter that beat analysts' expectations as customers snapped up iPhones and MacBooks while prices increased across the consumer electronics sector. Apple said sales for its fiscal third quarter ended June 27 were up 16.4% to $109.42 billion, compared with analyst estimates of a 15.5% rise to $108.65 billion, according to LSEG data, and Apple's own forecast of 14% to 17% sales growth. Apple's third-quarter profits were $2.02 per share, with 11 cents attributable to tariff refunds from the U.S. government. Excluding the tariff refunds, Apple's profits were still above Wall Street estimates of $1.89 per share. Driving Apple's results was a 21.7% increase in iPhone sales to $54.25 billion, above analysts' estimates of $53.86 billion, according to LSEG data. Those iPhone sales were Apple's best-ever for a third quarter, when phone sales typically begin to slow as customers anticipate new models during the fall. Apple on Thursday said that sales of Macs were up 28.7% to $10.35 billion, beating analyst estimates of $8.74 billion, according to LSEG data. Sales of iPads were down 5.9% to $6.19 billion, below analyst expectations of $6.92 billion, according to LSEG data. Wearable sales were up 6.5% to $7.88 billion, slightly above expectations of $7.82 billion, according to LSEG. But rising services revenue had failed to meet Wall Street targets. Expectations were high for Apple, which recently regained the title of world's most valuable company. Apple's second-biggest area for revenue, its services business, including its App Store, iCloud and content businesses, rose 12.1% to $30.74 billion, missing estimates of $31.22 billion, according to LSEG data. D.A. Davidson analyst Gil Luria said that services growth was slowing. "Investors are concerned that if services are decelerating while iPhone is growing more than 20%, it may slow down even more as iPhone sales come back down to earth," he said. In an interview with Reuters, Cook said that the main supply constraint that Apple had during the third quarter was an industry shortage of advanced chipmaking technology used to produce the Apple silicon chips at the heart of its devices. Cook said that was particularly true for the company's Mac lineup, whose sales grew 29% on the strength of the entry-level MacBook Neo and the high-end MacBook Pro despite price increases for those models. "If you look at the root causes behind those, it's that we're having an incredibly strong product cycle beyond our expectations, and the (advanced chipmaking) supply chain just fundamentally has less flexibility in it to meet the high levels of demand," Cook told Reuters. Apple is also grappling with a supply chain strained by hundreds of billions of dollars of spending to build out AI data centers, leading to a thinly concealed conflict with longtime memory supplier Micron MU.O. Cook has previously noted shortages of both memory chips and the main processor of iPhones supplied by Taiwan Semiconductor Manufacturing Co 2330.TW. Apple said its gross margins, which it had warned would come under pressure due to memory costs, were 50.1%. Apple said tariff refunds contributed two points of that margin. Excluding the refunds, gross margins were 48.1%, which was above the midpoint of Apple's guidance and above estimates of 47.92%, according to LSEG data. SAN FRANCISCO, July 30 (Reuters) - Apple forecast sales for the current quarter ending in September would grow more slowly than Wall Street targeted, and shares fell 7.8% in after-hours trade. Apple Chief Financial Officer Kevan Parekh told analysts and investors on a call that the iPhone maker expects revenue growth of 9% to 11% in the quarter compared to the year before. That was less than the 12% rise predicted by Wall Street, according to LSEG data. “We're seeing some very significant (supply) constraints currently with limited flexibility in the supply chain to remedy it,” Chief Executive Tim Cook said during the conference call. Unlike its Big Tech rivals, Apple has been more cautious with its spending, declining to plow hundreds of billions of dollars into its own data centers. By comparison, Google has invested heavily in data centers and stunned investors with negative free cash flow. But Apple has also signaled that it may have upcoming capital needs of its own by ending its longtime goal of returning all of its cash to shareholders. Sales rose in all parts of the globe, with Greater China revenue up 22.4% to $18.82 billion. That China revenue missed the $19.67 billion average target of six analysts polled by Visible Alpha. Apple stock has risen over 22% so far this year. Sales of the iPhone, Apple's cash cow.

Apple revenue, profits beat expectations on iPhone sales but services miss targets

Strong iPhone and Mac sales drive the quarter

Services miss and supply constraints weigh on outlook

Apple tops estimates but gives soft current-quarter outlook

China sales rise as investors weigh AI and capital spending

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