Strong iPhone 7 sales 'a bridge' to Apple's next upgrade

Wed Feb 1, 2017 10:20am EST
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By Supantha Mukherjee and Rishika Sadam

(Reuters) - "Things don't have to change the world to be important," Apple Inc (AAPL.O: Quote) co-founder Steve Jobs said in an interview in 1996.

His words rang true, two decades later, as sales of the iPhone 7 and 7 Plus - similar in design to their predecessor - surpassed expectations to reinstate Apple as the world's biggest smartphone seller after a five-year gap.

This has only built expectations, however, that the 10th-anniversary iPhone will need to offer revolutionary new features if it is to trigger a substantial uptick in sales.

"This is really the last (quarter) that anybody is going to care about iPhone until the launch this fall," Cowen & Co analysts wrote in a note. "It can be said that iPhone 7/7+ 'did its job' as a bridge to get to the supercycle in 2017."

Apple's shares rose as much as 5.8 percent to $128.30 early on Wednesday, their highest in 18 months, a day after the company dethroned Samsung Electronics Co Ltd (005930.KS: Quote) as the world's top smartphone seller based on units shipped.

At the day's high, more than $36 billion was added to the company's market value.

Apple sold 78.29 million iPhones in its fiscal first quarter ended Dec. 31, up from 74.78 million a year earlier. Analysts on average had expected sales of 77.42 million.

The sales reflected the first full quarter of iPhone 7 sales and come at a time when global demand for smartphones is slowing and cheaper Android alternatives are flooding the market. Apple may also have benefited from Samsung's much-publicized recall of its fire-prone Galaxy Note 7.   Continued...

A visitor takes pictures as customers gather at a store selling Apple products during the launch of the new iPhone 7 sales at the State Department Store, GUM, in central Moscow, Russia September 23, 2016. REUTERS/Sergei Karpukhin