'Dynamite'/Apple breaks streak with iPhone rebound

Spurred by strong iPhone 7 and iPhone 7 Plus holiday sales, the Cupertino, Calif.-based company reported first-quarter earnings rose to $3.36 per share on record revenue of $78.4 billion, up 3%, besting Wall Street analysts' estimates.

The results snapped a string of three straight quarters of declining iPhone shipments, which contributed to its first fiscal-year sales drop in more than a decade. And the results sent Apple shares up 3.5% in after-hours trading.

Analysts had forecast earnings of $3.22 per share on sales of $77.3 billion, according to S&P Global Market Intelligence. Net income fell 3% to $17.9 billion.

Apple CEO Tim Cook told CNBC it was a "dynamite" quarter.

A rebound in sales of Apple's flagship product, iPhone, contributed mightily to the financial reversal. Apple shipped 78.3 million iPhones during the quarter, and consumer demand for the higher priced iPhone 7 Plus added to its top line.

Market researcher Factset had predicted sales of 78 million, up from 74.8 million in the same quarter a year ago.

Apple Services had as much to do with the record quarter as iPhone, soaring 18% to $7.2 billion. "It is driving overall revenue growth, and will continue to for the next few years," says Bill Kreher, a technology analyst at Edward Jones. "It reduces the pressure of Apple creating hit products every few years."

The rally could be short-lived, however: Apple gave ho-hum guidance of revenue of $51.5 million to $53.5 million in its current quarter.

Apple's revenue has — and will continue — to depend on iPhone sales, says Thomas Husson, a principal analyst at market researcher Forrester.

Apple also reported a cash pile of $246.1 billion, most of it overseas. Should President Trump make good on his vow to allow companies to return offshore profits without onerous taxes, it would be "very good for the country and very good for Apple," Cook said in a conference call Tuesday.

The news wasn't all good. Apple reported year-over-year revenue declines in China and for iPad.

Shares of Apple have risen 9% since the election, contributing to the Dow Jones industrial average's rise over 20,000, and they're up 25% in the past year. That compares to a 12-month rise of 21% for the Nasdaq Composite.

Apple's ability to protect its turf in the smartphone market as Samsung attempts to rebound from its Galaxy Note 7 recall and Google pushes its Pixel phone will be closely scrutinized by Wall Street over the next few quarters, according to Daniel Ives, senior vice president of finance and corporate development at cloud-computing company Synchronoss Technologies.

What momentum Apple has is expected to build with the highly anticipated introduction of its 10th-anniversary iPhone, expected later this year.

Apple's iPhone sales machine to make a comeback

After three straight quarters of declining iPhone shipments, which contributed to its first fiscal-year sales drop in more than a decade, Apple sales are expected to edge up 1.5% to $77.1 billion from $75.9 billion a year ago, according to S&P Global Market Intelligence. Some analysts, such as UBS' Steven Milunovich, forecast Apple sales near the high end of its own guidance of $76 billion to $78 billion. Earnings per share are expected to drop to $3.22 from $3.28.

Somewhere in Silicon Valley, Apple executives may be able to exhale.

The Cupertino, Calif.-based company reports results for its fiscal first quarter, its strongest seasonally, on Tuesday after the market closes. Sales of iPhone, Apple's top-selling product, as usual will be closely watched. Factset estimates Apple sold 78 million, up from 74.8 million in the same quarter a year ago.

A bang-up quarter would be a welcome respite against a backdrop of flagging iPhone and desktop sales last year. But it could be short-lived amid saturated smartphone and PC markets worldwide.

Barclays analyst Mark Moskowitz doesn't expect   Apple shares to rise much this year because more consumers are "mixing down" for iPhone 6s in lieu of iPhone 7. He's also concerned about a potential trade war with China, and Apple's business prospects in India.

Shipments for Apple's iMacs and MacBooks last year plunged 9.8% from 2015, the largest drop among the top five PC makers and the first decline by Apple since 2012, according to market researcher IDC.

Apple shares have risen 10% since the election, contributing to the Dow Jones industrial average's rise over 20,000, and they're up 25% in the past year. That compares to a 12-month rise of 23% for the Nasdaq Composite.

Earlier this month, Apple CEO Tim Cook and other Apple executives took 2016 pay cuts after the company was tripped up by lower revenue because of weaker iPhone sales.

Apple has acknowledged the shortfall and focused revenue growth on its high-margin Apple Services business, App Store and Apple Music to shoulder the financial burden.

Apple Services revenue soared 24% to a record $6.3 billion in its last reported quarter. The App Store generated more than $20 billion in sales for developers last year, up 40% from 2015. Apple Music has topped 20 million paid members.

All encouraging stuff. But about those iPhones, the clear bread-winner of Apple's product portfolio?

Things could look up later this year, with the unveiling of the 10th-anniversary version of iPhone.

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