(Reuters) – Apple Inc (AAPL.O) forecast revenue for the holiday shopping-quarter largely above market expectations, allaying investor concerns about production delays on the eve of the launch of the highly anticipated iPhone X.
Apple opened pre-orders for the iPhone X on Oct. 27 and has said demand has been “off the charts,” although some analysts have been worried about supply chain issues that might prevent Apple making enough phones to satisfy demand.
The new phone, which goes on sale around the world on Friday, drew a line of about 350 people outside Apple’s store in Sydney, Australia shortly after the company released its results.
Apple Chief Financial Officer Luca Maestri told Reuters on Thursday the company was “quite happy” with how manufacturing of the iPhone X was progressing, noting that “production is growing every week, and that’s very, very important during a ramp period.”
Apple shares rose 3 percent in after-hours trading to hit a fresh all-time high.
Analysts have been eager to see whether Apple will be able to balance supply and demand for the iPhone X during the crucial holiday quarter, with most saying it will likely take Apple until next year or early spring to do so.
“Where the demand curve and supply curve are going to intersect, we do not know. It does not have a predecessor product,” Maestri told Reuters.
Apple forecast fiscal first-quarter revenue of $84 billion to $87 billion. Analysts on average were expecting $84.18 billion, according to Thomson Reuters I/B/E/S.
“A trillion-dollar market cap may now be in Cook’s sights in light of these results and guidance around iPhone X,” said Daniel Ives, an analyst at GBH Insights, referring to Apple Chief Executive Tim Cook.
Apple’s market capitalization of about $868 billion makes it the world’s most valuable publicly traded company.
Apple said it sold 46.7 million iPhones in the fourth quarter ended Sept. 30, above analysts’ estimates of 46.4 million, according to financial data and analytics firm FactSet. However, average selling prices of $618 fell short of analyst expectations of $638.
The company’s net income rose to $10.71 billion, or $2.07 per share, in the quarter, from $9.01 billion, or $1.67 per share, a year earlier. That beat the average estimate of $1.87 per share.
Apple gave a gross margin forecast of 38 percent to 38.5 percent, higher than many analysts expected because new products often have higher costs.
Maestri attributed the margin strength to Apple’s growing services business, which brought in $8.5 billion in revenue compared to analyst estimates of $7.5 billion.
The $28.85 billion revenue from iPhone sales accounted for nearly 55 percent of total revenue, which rose 12.2 percent to $52.58 billion.
Analysts on average were expecting total revenue of $50.7 billion, according to Thomson Reuters I/B/E/S.
Apple also said it returned to revenue growth in China, bringing in $9.8 billion versus $8 billion a year ago. Maestri also told Reuters the company had doubled its revenue in India during the fiscal fourth quarter, though he did not give any details.
Reporting by Pushkala Aripaka in Bengaluru and Stephen Nellis in San Francisco; Editing by Savio D’Souza and Bill Rigby