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Apple iPhone, services, Mac and Watch drive record quarter

Apple has reclaimed the title of top smartphone seller after record sales of the iPhone, Mac and Watch delivered it a record quarter

Apple has reported all-time record quarterly revenue for the three months to 31 December 2016 and reclaimed the title of the world’s top smartphone seller from Samsung.

The company posted revenue of $78.4bn, up 3% compared with the same period a year ago, but profit for the quarter was down nearly 3% to $17.89bn and operating expenses were up 9% to $6.8bn.

In the first full quarter since the release of the iPhone 7, Apple sold 78.29 million smartphones, which generated $54.4bn in revenue, up 5% year on year and up 93% compared with the previous quarter.

The iPhone sales meant Apple had a 17.8% share of the smartphone market in the quarter, compared with Samsung’s share of 17.7% from sales of 77.5 million smartphones, according to Strategy Analytics.

Analysts said Apple had also benefited from Samsung’s recall of the Galaxy Note 7 because of fires caused by faulty batteries.

The better-than-expected results for the quarter drove shares up 3% in after-hours trading, indicating a reversal in Apple’s fortunes after a slowdown in iPhone sales in 2016 resulted in Apple reporting a drop in annual revenue in October for the first time in 15 years.

The company reported revenue of $7.2bn from the Mac, $5.5bn from the iPad and $4bn from other products, including the Apple Watch.

“We are thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way,” said Apple chief executive Tim Cook.

“We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch.”

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Cook highlighted the fact that revenue from Apple’s services had grown strongly, “led by record customer activity on the App Store, and we are very excited about the products in our pipeline”.

Services revenue was up 18% year on year to $7.17bn, making it one of the fastest growing segments of the business.

Analysts expect growth in services revenue to help offset declining hardware sales as the smartphone market matures, according to the BBC.

Luca Maestri, Apple’s chief financial officer, said the business performance resulted in a new all-time record for earnings per share, and over $27bn in operating cashflow.

“We returned nearly $15bn to investors through share repurchases and dividends during the quarter, bringing cumulative payments through our capital return programme to over $200bn,” he said.

Despite the record quarter, Apple’s forecast for the next quarter is cautious, with the company predicting revenue between $51.5bn and $53.5bn.

Analysts said Apple expected sales to be affected by the strong dollar because most of their products outside the US had seen a price rise. The launch of Samsung’s Galaxy S8 in March 2017 may also have an impact on iPhone sales, analysts said.

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