Apple closes in on becoming the world's first US$1 trillion company

Apple store

Apple unit sales rose just 1 per cent from a year ago, which was expected, but the average selling price grew 20 per cent to Dollars 724 per iPhone, up from USD 606 a year ago.

Apple also posted earnings per share of $2.34, up 40 percent from previous year and beating expectations of $2.18.

Apple was largely spared in last week's tech sector sell-off when shares of Facebook Inc, Twitter Inc and Netflix fell sharply on concerns about their future growth. Apple's stock is up 3.2% in after-hours trading.

While the tech giant sold fewer of its flagship iPhones than expectedー41.3 million units versus estimates for 41.8 millionーthe average selling price of $724 was above forecasts. Apple Chief Financial Officer Luca Maestri told Reuters that customers were buying costlier models and the $999 iPhone X was the quarter's best seller.

In the year-ago quarter (Q3 2017), Apple earned $45.4 billion in revenue. He added, "We priced iPhone X at a level that represented the value of it and we could not be happier that it has been the top selling iPhone since the launch, and so we feel terrific about iPhone X". Apple said iPhone shipments edged about 1% higher.

Apple reported record services revenue of US$9.55 billion, up 31 per cent from a year earlier.

As with several recent quarters, the biggest success story is Apple's services business, which includes Apple Music, iCloud, Apple Pay, the App Store, AppleCare, and more.

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Cook said the services revenue is mainly driven by more people entering the Apple ecosystem and announced that paid subscriptions surpassed 300 million, a 60 percent year-over-year growth. Apple also regained growth in China, where sales rose 19 per cent. Other potential tariffs on the horizon could, though, and Cook said he was "optimistic that the countries will get through this" and that Apple is "hoping that calm has prevailed".

Despite the beat, James Cordwell, an analyst from Atlantic Equities, said the high selling prices might cause investors some concern because "there's a limit to how much Apple can grow the iPhone franchise by pushing pricing".

In other words, don't expect Apple to back off from a product strategy that's helping the company to grow its bottom line.

"We're on target to reach our goal of doubling our fiscal 2016 services revenue by 2020", CEO Tim Cook assured investors on the call. Analysts expected revenue of US$52.4 billion and earnings of US$2.18 a share.

The company also reported strong growth in its fastest-growing services division, which includes Apple Music, now the largest music streaming services in the US.

Apple's best-selling products do not yet face duties stemming from the US-China trade disputes, but US President Donald Trump has threatened hundreds of billions of dollars in further tariffs on product categories not yet been enumerated.

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