Could Apple have a surprise in store for the next iPhone? Investors clearly think so, sending the company’s share price up more than 4% Tuesday after Apple forecast a strong fall quarter, with revenue guidance of $61 billion to $64 billion for the quarter that includes September’s introduction of the new iPhone.
Apple revealed the forecast for its fiscal fourth quarter as part of its fiscal Q3 2019 earnings release. The company’s most recent quarter was otherwise solid, beating analyst expectations and returning to growth after two lagging quarters. iPhone sales continued to decline, but the company made up much of that shortfall by growing its services business as well as huge growth for wearables.
Apple generated revenue of $53.8 billion during its third fiscal quarter, which ended on June 30, compared to $53.27 billion during the same quarter in 2018. Net income for the quarter was $10.04 billion compared to $11.52 billion a year ago.
Those numbers equal a diluted earnings per share of $2.18, down from $2.34 in fiscal Q3 of 2018. Analysts had expected earnings per share of $2.09 on revenue of $53.3 billion.
Apple stopped including sales numbers for device categories in its earnings results, but revenue numbers for each segment revealed that iPhone revenues were down close to 12% year-over-year.
Wearables, on the other hand, surprised with strong growth, to the tune of 48%. The category includes sales of the Apple Watch, AirPod and other headphones, as well as devices like Apple TV and HomePod. Apple CEO Tim Cook called the results “a blowout quarter for wearables” during Tuesday afternoon’s earnings call.
The company’s services segment actually showed slower growth than in previous quarters. The segment grew just 12.6%, down from the second quarter of 2019, which yielded 16% growth year-over-year. Apple CFO Luca Maestri attributed this to a deceleration in the growth of AppleCare, the company’s hardware servicing business.
As usual, Apple executives didn’t tip their hand with regards to upcoming product launches, with Cook teasing: “We have several new products that we can’t wait to share with you.”
In addition to the next iPhone, Apple is scheduled to launch its Apple TV Plus video service this fall. The company has yet to reveal pricing or an exact launch date for the service, but Maestri cautioned that there may not be an immediate impact on Apple’s revenue. “The road to monetization takes some time,” he said.