WASHINGTON – While Apple reported record-high revenue above consensus expectations in its first quarter earnings Thursday, weaker iPhone units confirmed some investors’ fears.
Apple shipped 77.3 million iPhones during the quarter, below analyst expectations, and one million units less than Q1 2017. This confirms analysts suspicions that iPhone customers were not willing to pay nearly four figures for a mobile device.
The iPhone X, a revolutionary mobile device with facial recognition and 3-D technology, retails at $999, pre-tax, making it the most expensive iPhone model to date.
Analysts were expecting Apple would report a lower earnings report. Nikkei, an Asia focused news site, broke the news on Monday that Apple cut their iPhone X production in half, from 40 million units to 20 million units. Apple has neither confirmed nor denied these reports.
Before this quarter, Apple’s record was $78.4 million, reached in Q1 2017. The first fiscal quarter, October through December, tends to be a high earning period for Apple, due to the holiday season.
Apple beat their own expectations of $84 billion to $87 billion, predicted at the end of last quarter.
They also exceeded the expectations of analysts, which averaged at $87.3 billion, just slightly more than Apple’s high end of expectations.
Apple provided the following guidance for its fiscal 2018 first quarter in a November press release:
- Revenue between $84 billion and $87 billion
- Gross margin between 38 percent and 38.5 percent
- Operating expenses between $7.65 billion and $7.75 billion
- Other income/(expense) of $600 million
- Tax rate of 25.5 percent
Here is how they actually performed:
- Revenue of $88.3 billion
- Gross margin of 38 percent
- Operating expenses of $7.6 million
- Other income/(expense) of $756 million
- Tax rate of 26 percent
*all numbers taken from Apple news releases
Apple’s stock price closed Thursday afternoon ahead of earnings at $167.78. By Friday morning, they dropped 2.57 percent to $163.47.