MarketWatch First Take: iPhone SE, iPad Pro throw new wrinkle into Apple finances

Apple Inc.’s latest iPhone and iPad seem to have enjoyed a strong launch, but the results were a big change in one important but slightly esoteric measure.

Apple AAPL, -0.69%  reported slightly better-than-expected results for its fiscal third quarter Tuesday, but the results included a decline in the average selling prices for iPhones. The change comes after Apple revealed its first slowdown in iPhone sales last quarter, a pattern that continued Tuesday, which fuels investor fears that the company’s biggest revenue generator has peaked.

Apple said Tuesday its average selling price was $595 for the iPhone in the quarter, which was below Wall Street’s consensus estimate of $612, according to FactSet, and down from nearly $700 just two quarters ago. That was due in large part, according to Apple Chief Financial Officer Luca Maestri, to strong sales of the iPhone SE, the company’s smaller, lower-cost model that launched in March. In addition, foreign currency fluctuations, such as the stronger U.S. dollar, also played a role.

“But we do expect iPhone ASP to improve sequentially moving into the September quarter because these two factors are not going to repeat,” Maestri told analysts on Apple’s conference call.

To investors, those comments could also imply that the company will also be introducing a new iPhone during the September quarter, as it typically does every fall ahead of the big holiday shopping season. Investors are already counting on an iPhone 7 to revive its slowing sales, and now will need it to push ASPs higher as well.

However, in recent weeks, at least one analyst has forecast that the next iPhone launch will have a muted reception with more modest feature improvements, compared with larger expectations for radical changes to come in the iPhone in 2017, which will be the 10th anniversary of the iPhone.

On the other side of the spectrum, the average selling prices for the iPad were higher than expected, with Apple noting that iPad ASPs came in at $490. That was much higher than the $430 consensus ASP for the iPad, according to FactSet, and the highest iPad ASP since 2012. As a result, iPad saw revenue growth for the first time in 10 quarters, even as unit shipments fell 9% year-over-year. That is likely due to bigger sales of the iPad Pro, Apple’s higher-end iPad aimed at corporate customers, which was announced at the same event as the iPhone SE.

The company’s comments around ASPs provided a window into the current quarter. Apple executives declined to comment on new products, but their forecast of revenue for the fiscal fourth quarter of $45.5 billion to $47.5 billion, seems to imply new iPhones will be launched, which should help ASPs.

Still, that forecast also implies that Apple sales are not going to surge again anytime soon. In the October quarter of fiscal 2015, Apple reported revenue of $51.5 billion, with year-over-year growth of 22%. Apple could be lowballing its forecast, as it has done in the past.

Apple has long been proud of selling lots of high-end devices for a premium. With the performance of the iPhone SE and iPad Pro, Apple is taking a different approach by looking for growth with a cheaper iPhone and lesser unit sales for more expensive iPads. Investors desperate for growth at Apple will want to keep an eye on ASPs to gauge those effects in the future.

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