Apple profits from higher-priced iPhones

Automated Insights

Apple made more money from higher priced iPhones in the latest quarter, even as unit sales were relatively unchanged.

Shares of Apple rose nearly 3 percent Tuesday after it reported fiscal third-quarter results that beat Wall Street expectations.

Unit volume rose just 1 percent from a year ago to 41.3 million, which was expected, but the average selling price grew 20 percent to $724 per iPhone, up from $606 a year ago.

That suggests that more consumers were buying its premium iPhone X, which starts at $999.

The iPhone X features a brighter screen that spans the device from edge to edge, and boasts facial recognition technology for unlocking the device and other features.

But while that model costs a few hundred dollars more than previous iPhones, Apple’s base models — the iPhone 8 and 8 Plus — also had $50 and $30 price increases compared with their predecessors.

Revenue from the app store, music subscriptions and other services grew 31 percent to $9.5 billion, a record for Apple.

The figure included a one-time gain of $236 million in connection with resolving various lawsuits, which the company didn’t specify. During the quarter, Apple settled a long-running patent battle with Samsung.

Apple also reported a 37 percent increase, to $3.7 billion, in the division for miscellaneous hardware, including Apple Watch and the HomePod smart speaker.

But Apple saw revenue declines in both the iPad and Mac computers.

Cupertino, California-based Apple said net income rose 32 percent to $11.52 billion, or $2.34 per share.

That beat the $2.17 per share expected by 10 analysts surveyed by Zacks Investment Research.

The maker of iPhones, iPads and other products posted revenue of $53.27 billion, up 17 percent, also exceeding Street forecasts for revenue of $52.37 billion.

For the current quarter ending in September, Apple said it expects revenue of $60 billion to $62 billion. Analysts surveyed by Zacks had expected revenue of $58.59 billion.

Apple shares have climbed 12 percent since the beginning of the year, while the Standard & Poor’s 500 index has climbed slightly more than 5 percent.

In the final minutes of trading on Tuesday, shares hit $190.29, a climb of 28 percent in the past 12 months.