Apple beat Wall Street estimates on both revenue and profit last night, as the tech giant forecast a comeback in iPhone sales later this year.
The move followed rival Samsung reporting its worst profit drop in two years, falling 63 per cent year-on-year to 6.2 trillion won (£4bn). Smartphone companies worldwide have been hurt by a recent slowdown in consumers waiting to upgrade their phones.
Apple boss Tim Cook said the company had confidence “things are getting a bit better”, as sales of its flagship iPhone began to stabilise in China and wearables and accessories continued to outperform.
The positive outlook followed a reduction in sales guidance by Cook in January, as appetite for the iPhone started to wane.
Earnings per share reached $2.46 for the first three months of 2019, topping estimates of $2.36. Revenue fell five per cent to $58bn (£50bn), above expectations of $57.4bn.
Apple’s share price jumped more than five per cent in after-hours trading.
Sales of the iPhone marked their heaviest decline to date, falling 17 per cent in the first quarter and narrowly missing estimates. Apple executives said sales had since picked up, giving grounds for optimism.
The Cupertino-based tech firm said it expects revenue between $52.5bn and $54.5bn for the current quarter, surpassing the average analyst estimate of $51.9bn.
Samsung’s latest slate of phones experienced a “modest” rise in volume and revenue, though profit fell 40 per cent compared to the same quarter in 2018.
Apple’s growing services revenue, which includes Apple Music, the App Store and iCloud, rose to $11.5bn and beat estimates of $11.3bn. It now represents a third of Apple’s overall gross profit. The iPad also made a comeback, as sales jumped 22 per cent despite a stagnating tablet market.
Hargreaves Lansdown equity analyst George Salmon said there were “plenty of positives for investors” in the results.
"It was always going to be a tough one for iPhones. Updates earlier this year had made it clear Apple was suffering in China, while the flagship product’s revenues were under pressure after Apple took the tough decision to reduce prices to prop up declining sales volumes.
"The real news for investors in these numbers is the robust performance from Apple’s new growth drivers, namely the Services business and Wearables."