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Apple Posts Record Revenue, Lifts S&P 500 and IT Sector

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Feb. 2 2017, Published 8:40 a.m. ET

Information technology

After falling for two consecutive trading days, the information technology sector regained strength and moved higher. The S&P 500 Information technology sector rose 0.75% on February 1. Technology stocks’ earnings results have been stronger in the last quarter. It’s important to note that 89% of the technology stocks’ earnings beat the market’s expectations, while it’s 66% for the entire S&P 500.

Apple (AAPL) and NVIDIA (NVDA) were the top performers in the information technology sector on February 1. On Wednesday, Apple’s earnings results beat analysts’ expectations. It reported record quarterly revenue of $78.4 billion for the quarter ending on December 31, 2016. The earnings per share was an at an all-time high of $3.28 per share. According to Apple, international sales accounted for 64% of the total revenue last quarter.

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iPhones sales rose

In fiscal 1Q17 (ending December 31, 2016), Apple sold 78.29 million iPhones—better than analysts’ estimates of 77.42 million sales. Apple’s services business also recorded solid growth. Revenue from App Store, Apple Pay, and iCloud that come under Apple services business rose 18.4%. The increased revenue from subscriptions and support from high-demand games such as Pokemon Go and Super Mario Run pushed the revenues higher.

Guidance for fiscal 2Q17

For the quarter ending on March 31, 2017, Apple expects revenue of $51.5 billion–$53.5 billion with a gross margin of 38%–39%. Operating expenses are expected to be $6.5 billion–$6.6 billion. The revenue forecast was below expectations. Apple expects that its customers might hold back upgrades ahead of the launch of the tenth anniversary iPhone. Caution was also maintained for revenue projections considering the strength of the US dollar. A cash dividend of $0.57 per share has been declared by Apple’s board of directors on common stock.

Next, we’ll discuss how the health care and energy sectors performed on Wednesday.

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