Lower iPad and other hardware sales contrasted sharply with expanding revenues from digital services in Apple’s latest results.
The number of paying subscribers for services including iCloud, Apple Music and the App Store crossed 1bn for the first time and sales reached a record high of $21.2bn.
But sales of iPhones, iPads and Mac computers were lower than the same quarter a year ago, dragging down overall revenues for the third consecutive quarter.
Revenues for the three months to the end of June were $81.8bn, down from $83bn a year ago. The company indicated revenues for the current quarter could also fall, sending Apple’s share price down 2.5 per cent in after-market trading.
“There remains some hardware headwinds, which may give us a read on the overall consumer right now,” said David Wagner, portfolio manager at Aptus Capital Advisors.
The record performance of Apple’s services business was echoed in the results of Amazon, which also published its latest quarterly results after the market closed yesterday.
Signs that the slowdown in cloud computing had bottomed boosted revenues and profits at the online retailer. Moreover, large lay-offs earlier this year helped to lift profit margins.
The better than expected results sent Amazon shares 9 per cent higher in after-market trading.
More on Amazon and Apple: Whether you prefer to own Apple or Amazon stock will reflect on what you think about the future of technology, argues Robert Armstrong.
Here’s what else I’m keeping tabs on today:
Economic data: Economists expect the US jobs market to add the fewest number of openings since December 2020 after almost 18 months of rising interest rates. Here’s what to expect from today’s employment figures.
Donald Trump speech: The former president is scheduled to make his first public speech since being indicted for a third time. Trump will speak at an event hosted by the Alabama Republican Party in Montgomery later today.
Saudi-led Ukraine talks: Dozens of countries will begin talks at a conference hosted by the kingdom to sway developing countries to support Kyiv’s demands for Russia to withdraw troops.
Results: Warren Buffett’s Berkshire Hathaway will report its latest results tomorrow.
How well did you keep up with the news this week? Take our quiz.
Five more top stories
1. Donald Trump called the latest criminal charges against him the “persecution of a political opponent” after his Washington court appearance. Judge Moxila Upadhyaya set the first hearing in the latest case for August 28 as one of the former president’s lawyers said he would ask the court to reject the prosecutors’ request for a speedy trial. Read more on yesterday’s court proceedings.
Opinion: The indictment is welcome news for America’s democracy and its democratic allies, write Donald Ayer, US deputy attorney-general under George HW Bush, and Norman Eisen, special counsel in the Barack Obama White House.
2. Hedge funds have lost more than $6bn this year betting against cruise lines and hotels. Royal Caribbean and Carnival are two of the 10 most heavily shorted companies in the S&P 500 but have confounded short sellers’ expectations by more than doubling in value so far this year. Read more on the bet that has gone wrong for hedge fund investors.
3. The chair of the House China committee has written to Joe Biden and urged him to widen forthcoming limits on investments in China to cover stocks and bonds. The president is expected to sign a new executive order next week restricting investments linked to China’s military. Read more on Mike Gallagher’s letter.
More on US-China tensions: Two US Navy sailors have been arrested and charged with passing sensitive military information to China in exchange for thousands of dollars in payments.
4. KKR is in advanced talks to buy US book publisher Simon & Schuster from Paramount for more than $1.6bn, according to people familiar with the matter. Last year regulators blocked a proposed merger between Penguin Random House and Simon & Schuster on competition grounds. Read more on the latest attempt to sell Simon & Schuster.
4. Chase Coleman’s Tiger Global has built a big stake in private equity group Apollo Global as the hedge fund looks beyond the technology investments that have been its mainstay in recent years in a hunt for better returns. The investment was revealed in a mid-year letter sent to investors and seen by the Financial Times. Read more on Tiger’s new investment strategy.
Diageo vs Diddy
When Diageo entered into a profit-sharing arrangement with US rapper and entrepreneur Sean Combs, also known as Diddy, in 2007, celebrity partnerships were still rare. Sixteen years later the relationship has descended into acrimony, with the musician and conglomerate poised to enter a legal battle over the terms of their partnership. Read more on the bitter dispute.
We’re also reading . . .
Gillian Tett: Fitch’s downgrade of US government debt reveals America is being judged less like a developed country — and more as an emerging market.
Productivity lessons: Here’s the inconvenient truth: you’ll never clear all your tasks, so just do your best with the time you have, writes Tim Harford.
Chart of the day
US Treasury yields yesterday climbed to a nine-month high, continuing their ascent following an announcement from the government that it would increase its borrowing in the coming months. Hedge fund manager Bill Ackman added to the pressure on long-dated US government bonds after saying he was shorting US 30-year Treasuries. Read more on the latest moves in the US government bond market.
Take a break from the news
Here are our six films to watch this week, including Paris Memories, a drama by Alice Winocour about recovering erased memories following the trauma of the terrorist attacks in and around the Bataclan concert hall in November 2015.
Additional contributions by Tee Zhuo and Benjamin Wilhelm
Source: Economy - ft.com
