What's going on?
Apple’s quarterly results on Tuesday brought it closer to becoming the first company valued at one trillion dollars. It beat expectations and its stock rose by 3%.
What does this mean?
The real big Apple sold 1% more iPhones than the same time last year, which was actually fewer than predicted. But because people traded up to a fancy iPhone X – with the $1,000 price tag to match – the higher price compared to humbler, cheaper models meant overall iPhone revenues grew by 20%.
Apple’s services business (which includes the App Store, Apple Music and Apple Pay) maintained its above-30% sales growth (just as it did last quarter). It’s cheaper for Apple to provide digital content and services than to make phones, tablets and computers, so an increase in people using its services probably grew profits more than hardware sales.
Why should I care?
For markets: $15 billion shy of a trillion.
Apple’s now valued at approximately $985 billion, just $15 billion shy of that sweet trillion. Some investors believe the company’s stock is well placed to continue rising: only 25% of people who own Apple gear pay up for its services (tweet this), so increasing this is one way to grow profits. That said, half the analysts who advise investors on what to do with Apple’s stock think people should hold on to what they’ve got, or sell, rather than buying shares.
The bigger picture: Sorry, Samsung – Apple wins this round.
Shares of Samsung Electronics – a major Apple competitor (and courtroom nemesis) – fell by 1% on Tuesday. It sold fewer Galaxy S9 smartphones than hoped in the last quarter with competition hotting up from Xiaomi and Huawei. Its future should be brighter, though, as sales of semiconductors (electrical components that go into phones, for example) and phone screens should pick up in the rest of the year. Apple’s one of its customers for phone screens, so if a new iPhone’s in the offing (as people expect), we’ll probably see more cash in Samsung’s coffers.