Apple Inc. (NASDAQ:AAPL) has appeared to dismiss speculation that the iPhone 8 has been delayed by providing an upbeat outlook on revenue for the fourth quarter.
The tech giant smashed expectations for third-quarter profit and revenue growth despite a widely expected slowdown in iPhone sales.
Third quarter earnings came to US$8.72bn, or US$1.67 per share, up from US$7.8bn, or US$1.42 per share in the year-ago period. Analysts had forecast earnings of US$1.57 per share.
Revenue rose to US$45.41bn from US$42.36bn, exceeding market estimates of US$44.89bn.
Apple sold 41.03 million iPhones, up from 40.4 million the same period last year but down from 50.8 million in the second quarter.
Shares in Apple rose 4.81% to US$157.25 each in early US trading.
READ: Apple hit by fresh iPhone 8 delay rumours after analysts point to development issues
Consumers await iPhone 8 release
Chief executive Tim Cook admitted there was a “pause” in iPhone sales as consumers held out for the 10th anniversary model.
While the iPhone 8 is expected to be released in September, some reports suggested it could be delayed until later in the year due to supply chain issues with components needed to create the phone. If the release of the next iPhone is delayed, Apple’s fourth quarter would lose the benefit from a likely surge in sales.
However, Cook seemed to put those rumours to bed by saying the group expects revenues between US$49bn and $US52bn in the final quarter, ahead of previous forecasts.
The new iPhone is expected to be released with a version costing more than US$1,000 and said to include infrared-based facial recognition to unlock the device, eliminating the need for a passcode or finger print. The phone could include an edge-to-edge display with an OLED screen, instead of LCD used on previous models.
IPads, Macs and Apple Watch sales rise
In other areas of Apple’s business, sales of iPads surprisingly jumped 14.8% in the third quarter to 11.4 million units after a three-year slump.
Revenues of Mac computers grew 7% to 4.29 million units while the Apple Watch sales increased 50%.
The service division – which includes the App Store, iCloud storage and Apple News, achieved a record US$7.2bn in revenue for the quarter—rising from US$5.98bn the previous year.
Tim Cook defends drop in China revenues
However, one blemish on its results was China where revenues fell 10% year-on-year, hit by competition from cheaper smartphone rivals including Oppo, Huawei and Xiaomi.
Apple may turn its focus to services and apps to improve revenues in China but it could face challenges in dealing with the nation’s strict internet censorship regime.
China requires licences for all virtual private networks (VPN) – which allow users to skirt around the country’s censorship filters and gain access websites and services that are restricted or banned there. This meant Apple last month had to pull more than 60 VPN apps from its Apple Store in China.
Cook defended Apple’s decision during an earnings call, saying that approved APNs were still available.
"We would rather not remove the apps, but like in other countries, we obey the laws where we do business," he said.
“We are hopeful that over time, the restrictions we are seeing are loosened, because innovation really requires freedom to collaborate and communicate, and I know that is a major focus there."
He also defended the company’s third quarter results in China.
“If you look underneath the numbers, which you can't see from the data sheet, Mainland China was flat year on year. In constant currency, it was actually up 5%, so we feel great about that.”
Last month Apple established its first data centre in China, collaborating with local company Guizhou-Cloud Big Data Industry. Some critics have said that housing data in China could create pressure for Apple to hand over data in future disputes, though the firm said it would not compromise users' privacy.