Announcing the first quarterly results after achieving the $1-trillion valuation milestone, Apple (AAPL) reported record earnings for the fourth quarter amidst strong revenue growth. Meanwhile, the market responded negatively to the stagnant demand for iPhone, the company’s flagship product, and weak guidance for the first quarter. The stock plunged about 7% Thursday following the announcement.
Net income climbed to $14.1 billion or $2.91 per share from $10.7 billion or $2.07 per share in the fourth quarter of 2017. Analysts had forecast a slower growth.
At $62.9 billion, revenues were higher by 20% compared to the year-ago quarter and above analysts’ forecast. The top-line benefitted from a marked increase in the prices for iPhone. All the geographical regions witnessed double-digit growth in the fourth quarter when overseas markets accounted for more than 60% of all sales. Services revenues rose to an all-time high of $10 billion.
Though iPhone sales surged 29% to $37.2 billion during the quarter, shipments of the iconic smartphone remained broadly unchanged year-on-year at 46,889,000 units, missing analysts’ estimate. The average selling price of iPhone rose sharply, reflecting the management’s aggressive pricing strategy to offset the muted sales.
“Over the past two months, we’ve delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems, and we enter the holiday season with our strongest lineup of products and services eve,” said CEO Tom Cook.
For the first quarter, the company expects revenues in the range of $89 billion to $93 billion, which is slightly below the street view. Gross margin is forecast between 38% and 38.5% and operating expenses in the range of $8.7 billion to $8.8 billion.
During the September quarter, Apple’s board of directors declared a cash dividend of $0.73 per share, to be paid on November 15, 2018, to shareholders of record on November 12, 2018.
Since achieving $1-trillion in valuation in August this year, Apple’s shares rose about 4%. The stock, which gained 28% in the past twelve months, traded higher throughout Thursday’s regular session. However, it dropped about 7% during the extended trading session.