Apple shares jump as guidance suggests timely launch of the iPhone 8

Tim Cook, Apple CEO
Apple CEO Tim Cook led Apple through a stronger-than-expected second quarter.

Shares of Apple jumped to a record high after the company beat expectations for quarterly iPhone sales, earnings per share and revenue. But investors’ optimism may have more to do with the suggestion that the launch of the upcoming iPhone is on schedule.

Apple sold 41 million iPhones during its fiscal third quarter, up slightly from the 40.4 million it sold during the year-ago period, and sales of its 10.5-inch iPad Pro helped drive its best nonholiday quarter for tablets in more than two years.

Earnings came in at $8.72 billion, or $1.67 a share, beating the $1.57 per share predicted by analysts surveyed by FactSet, according to MarketWatch. The company also continued to grow its revenue from services, which increased to $7.27 billion from $5.98 billion year over year to beat analysts’ forecasts of roughly $7.07 billion.

“We reported unit and revenue growth in all our product categories in the June quarter, driving 17% growth in earnings per share,” Apple CFO Luca Maestri said in the company’s earnings release. “We also returned $11.7 billion to investors during the quarter, bringing cumulative capital returns under our program to almost $223 billion.”

Analysts and investors appeared to be more focused on the guidance Apple issued for its fiscal fourth quarter, however. The company pegged total revenue in the range of $49 billion to $52 billion for the current quarter, while analysts had predicted $49.21 billion, according to Thomson Reuters I/B/E/S.

The upcoming version of Apple’s high-end phone has long been rumored to be delayed. But analysts generally agreed that the unexpectedly high guidance—coupled with Apple’s move to reduce its inventory of existing iPhone models—likely point to a punctual introduction of the next flagship.

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“Revenue guide of $49 billion to $52 billion was higher vs. prior Wall Street estimates of $49.2 billion and iPhone channel inventory reduction may suggest the iPhone launch timing could be similar to prior years,” Maynard Um of Wells Fargo Securities wrote in a note to investors.

Jan Dawson of Jackdaw Research went a step further, predicting that the new flagship may not face the component shortages that have dragged down sales of earlier models.

“Perhaps more significantly for the longer-term outlook, the company provided guidance for the September quarter which essentially guarantees new iPhone hardware in September,” Dawson said in a blog post. “I would guess at the very least Apple will have the successors to the current phones on sale in the usual timeframe and in the usual volumes, while my hunch is that the new higher-end model will also go on sale at the same time but be even more heavily supply-constrained than new iPhones usually are.”

Shares of Apple were up roughly 5% by mid-day Wednesday.