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MW Apple profit nearly doubles as iPhone sales boom, but company projects growth slowdown

By Emily Bary

Supply constraints and foreign exchange expected to drive lower growth rate in September quarter

Apple Inc. just posted its strongest June quarter ever, with a near doubling of profits and a huge revenue beat for its iPhone business, though shares slipped in the extended session after the company projected slower growth for the current period.

The company posted fiscal third-quarter net income of $21.74 billion, or $1.30 a share, up from $11.25 billion, or 65 cents a share, a year earlier. Analysts tracked by FactSet were expecting earnings per share of $1.01.

Apple's $(AAPL)$ revenue for the quarter rose to $81.43 billion from $59.69 billion, while analysts had been anticipating $73.34 billion. The biggest positive surprise came in the iPhone segment, which exceeded revenue expectations by more than $5 billion.

The smartphone giant delivered $39.57 billion in iPhone revenue, up from $26.42 billion a year prior and far ahead of the FactSet consensus, which called for $34.19 billion.

Once again, Apple declined to provide a numerical revenue forecast for the current period but offered "directional insights."

Apple expects "very strong double-digit" year-over-year revenue growth in the September quarter, though with a growth rate not as high as the 36% seen in the June quarter, according to Chief Financial Officer Luca Maestri. The company anticipates a less favorable impact from foreign exchange, a return to "more typical" growth for the services business, and a greater impact from supply constraints relative to the June quarter.

Though the company was able to limit the impact of supply constraints in the June quarter such that the impact was slightly below the low end of the $3 billion to $4 billion that executives had originally projected, Apple expects a higher number in the September quarter, with impacts mainly to the iPhone and iPad businesses.

Chief Executive Tim Cook noted that Apple "is paying more for freight costs than I would like to pay," though component costs are falling in aggregate.

Shares were off 2.2% in after-hours trading.

The company had been seeing strong performances from its iPad and Mac businesses amid the pandemic as the remote-work boom fueled demand for those devices, and Apple posted growth once again in the June period. Apple generated $8.24 billion in Mac revenue for the quarter, up from $7.08 billion a year prior, as well as $7.37 billion in iPad revenue, up from $6.59 billion a year ago. Analysts were projecting $7.86 billion and $7.17 billion, respectively.

Apple saw revenue for its services unit climb to $17.49 billion from $13.16 billion a year ago, above estimates for $16.26 billion. The services revenue total was an all-time record.

The company posted $8.78 billion in revenue from its wearables, home and accessories segment. That compares with $6.45 billion a year prior and the $7.83 billion FactSet consensus.

Shares of Apple have gained just over 10% so far this year as the Dow Jones Industrial Average , of which Apple is a component, has risen upwards of 14%.

-Emily Bary; 415-439-6400; AskNewswires@dowjones.com

$(END)$ Dow Jones Newswires

July 27, 2021 18:05 ET (22:05 GMT)

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