海角大神

Is the Apple Watch a bust? Wall Street still undecided.

Sales are still surging for the iPhone, but Apple shares are down after hints that the company's much-vaunted smartwatch may not be selling as fast as predicted.

|
Robert Galbraith/Reuters/File
An image of an Apple Watch is shown on a wall at its retail store in San Francisco, California, July 21, 2015. Apple reported a 32.5 percent rise in quarterly revenue, helped by 35 percent jump in sales of its flagship iPhones.

Apple's聽latest financial report shows iPhone sales are still surging, driven partly by growth in China. But it also contains hints that聽Apple's much-vaunted smartwatch may not be selling as fast as Wall Street expected.

The California tech giant sold more than 47.5 million iPhones during the three months ending in June, or 35 percent more than a year ago. That sent聽Apple's聽profit soaring nearly 38 percent for the quarter, to $10.7 billion.

But a lukewarm forecast for the current period, combined with uncertainty over the new聽Apple聽Watch, helped drive聽Apple聽shares down more than 6 percent in late trading Tuesday night.

While the iPhone is the engine of聽Apple's聽current success, many analysts and investors see the sleek new smartwatch as an important indicator of the company's ability to produce new products. CEO Tim Cook said Tuesday that watch sales outpaced initial sales of the iPhone and iPad during the first nine weeks after their launch.

Apple聽has previously said it sold 1 million iPhones in the first 74 days, or more than 10 weeks, after sales began in 2007.聽Apple聽has said it sold 2 million iPads in the first 60 days, with iPad sales hitting 3 million in 80 days after the iPad was launched in 2010. Analysts surveyed by FactSet had expected聽Apple聽to sell 4 million watches in the quarter.

Cook, however, declined to be more specific, saying he didn't want to give聽Apple's competitors any insights into the new product.

"Sales of the watch did exceed our own forecasts," Cook told analysts on a conference call, adding that demand outpaced supply in the early weeks. He said watch sales in June were greater than in May or April, when the watch first became available.

Some analysts noted that聽Apple聽reported $2.6 billion in revenue from the company's "Other Products" segment, which includes the watch. That's about $952 million more than the previous quarter, when the watch had not yet gone on sale, or significantly less than the $1.8 billion in watch sales that analysts surveyed by FactSet were expecting.

But Chief Financial Officer Luca Maestri told The Associated Press that revenue from the watch amounted to "well over" that $952 million increase. He said the watch sales were offset by declining revenue from iPods and accessories, which are also lumped into that segment.

Apple's聽quarterly revenue from all sources grew 33 percent from last year to $49.6 billion in the April-June quarter, with the iPhone contributing $31.4 billion in sales. Net income climbed nearly 38 percent to $10.7 billion, while earnings amounted to $1.85 per share.

That beat the estimates of Wall Street analysts surveyed by FactSet, who were expecting聽Apple聽to report earnings of $1.81 per share on sales of $49.25 billion.

Apple聽got a big boost from new markets like China, which contributed more than a quarter of the company's revenue, or $13.2 billion. China sales more than doubled from a year ago.

The company is also benefiting from its decision to offer bigger screens with the iPhone 6 and 6 Plus, which is helping to lure consumers away from competing phone makers that started selling bigger-screen devices a few years earlier.

Apple聽sold more iPhones than the 47 million expected, on average, by analysts surveyed by FactSet. But in a sign of Wall Street's high expectations, some analysts said they were looking for sales of up to 49 million.

Analysts also worry about whether聽Apple聽can sustain its recent growth. In the coming months, it will face more difficult comparisons against the surge in sales that followed the iPhone 6 launch last September.

The company said Tuesday that it's expecting between $49 billion and $51 billion in revenue for the quarter ending in September. The mid-point of that range is below the average analyst estimate of $50.8 billion.

Meanwhile, many Apple-watchers were keen to hear more about the company's newest gadget. While not expected to be a major revenue source now, the聽AppleWatch has symbolic importance as the first new product category that聽Apple聽has launched since the 2011 death of co-founder and iconic CEO Steve Jobs.

"When you look at the next big wave of innovation, in coming years, it's not going to come from smartphones," said analyst Angelo Zino of S&P Capital Markets, who said phones are already becoming "commodity" items, even with聽Apple聽dominating the high end of that market. "So a lot of people want to see if聽Apple聽can roll out a new product that's very successful and innovative.

Maestri acknowledged that聽Apple聽has released detailed sales figures for other products, but he said the company wanted "to be careful" with information about the watch, to avoid tipping competitors as聽Apple聽learns more about consumer demand for a new product.

"We know that, for us to be successful, we need to innovate all the time," he added. "But when you look at what we've launched in the last 12 months, I think you can conclude that we're in great shape from the innovation standpoint."

Besides the聽Apple聽Watch,聽Apple聽has released new models of other devices and launched its聽Apple聽Pay electronic payments service last fall and a streaming music service this month.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
海角大神 was founded in 1908 to lift the standard of journalism and uplift humanity. We aim to 鈥渟peak the truth in love.鈥 Our goal is not to tell you what to think, but to give you the essential knowledge and understanding to come to your own intelligent conclusions. Join us in this mission by subscribing.
QR Code to Is the Apple Watch a bust? Wall Street still undecided.
Read this article in
/Business/2015/0721/Is-the-Apple-Watch-a-bust-Wall-Street-still-undecided
QR Code to Subscription page
Start your subscription today
/subscribe