Services, wearables lift Apple in Q1; iPhone prices to be cut

Dubai - Lower trade-in prices in UAE for limited period

Apple once again calmed nerves in today's highly-volatile markets, reporting new revenue records in a number of segments - plus a little pricing bonus for good measure.
The US bellwether reported its financial results for the first quarter of fiscal year 2019, showing more resilience as its other growing verticals picked up the slack for lower iPhone sales.
Services, which is continuing is run as a vital cog in the Apple machine, rose 19 per cent year-on-year to $10.9 billion, an all-time high. Also setting new records were the Wearables, Home and Accessories segment, which leapt 33 per cent, and Macs, which grew 9 per cent.
iPad revenue was also up 17 per cent, after a 15 per cent decline in the previous quarter, widely attributed to the revamped iPad Pros that were launched in late-October.
And, as expected, numbers for the iPhone dropped. Revenue for the company's flagship product fell 15 per cent year-on-year to $52 billion.
Overall revenue fell to a still-robust $84.3 billion for the three-month period, with profit at $19.97 billion. Earnings per share (EPS) was at a record $4.18, up 7.5 per cent.
Apple on January 2 revised its guidance for the first quarter, mostly blamed on challenges in emerging markets and weak China demand. The caution was a rare one for the company; it was the first such action in 12 years.
CEO Tim Cook, however, remained confident that this was only a minor and temporary blip.
He acknowledged that while it was "disappointing" to miss their revenue guidance, the long-term prospects remain very positive.
"We manage Apple for the long term, and this quarter's results demonstrate that the underlying strength of our business runs deep and wide," he added.
This is also the first instance in which Apple did not report specific unit sales for the iPhone, iPad and Mac. Chief financial officer Luca Maestri had announced this policy shift during the company's fourth-quarter earnings conference call last November 1.
A "strong" cash flow of $26.7 billion was generated during the first quarter, he added.
For its fiscal second quarter, Apple expects revenue between $55 billion and $59 billion.
During the conference call that started at 2am in the UAE on Wednesday, Cook revealed that record earnings were also posted in key markets such as the US, Canada, Germany, Korea, Spain, Italy and Mexico.
And while China has indeed been a concern for Apple, Services hit an all-time high in the world's second-largest economy, with wearables experiencing a "strong" performance, up 50 per cent.
"We see great upside in continuing to focus on the things we can control," Cook said.
However, he stressed that the China situation seems to be getting much better compared to what they had seen when they announced their revenue revision.
He added that a number of factors affected the iPhone's performance. But "for millions of customers, we made it cheap and efficient to help customers hold onto their iPhones a bit. Some people have suggested we shouldn't have done this because of the impact on upgrades, but we strongly believe it was the right thing to do."
Apple Pay, the App Store and its Search Ads, and Cloud Services also posted record numbers. Apple Pay, in particular, had 1.8 billion transactions in the first quarter.
iPhone prices to be cut; lower trade-in prices in UAE
In an effort to boost iPhone sales, Cook announced that Apple will be lowering the smartphone's prices in certain markets outside the United States, particularly in markets where the strong dollar has been negatively affecting pricing.
This would only be the second time Apple would resort to such a move, the first being in 2007 shortly after the original iPhone was launched.
The company made no mention which countries will be benefiting from this. However, in China - one of the countries most affected by the rising greenback - retailers already implemented price cuts earlier this month.
The UAE is unlikely to be among those, as the country's currency, the dirham, is pegged to the dollar, thus shielding it from any volatility in foreign exchange markets.
Apple, however, is offering lower prices on the new iPhones for a limited time in the UAE. An iPhone XS and XR can be acquired for as low as Dh3,049 and Dh1,999, respectively.

^{Trade-in prices as shown on Apple's UAE website}
The trade-in is not limited to Apple products, as devices for other brands are accepted, each with a corresponding value.
No mention was made on until when the trade-in period will end.
- alvin@khaleejtimes.com