**iPhone 16 Boosts Apple Sales Despite EU Tax Setback**

Apple's iPhone 16 launch has propelled the company's smartphone sales to a 5.5% increase for the September quarter, surpassing analyst predictions. However, the tech giant's overall profit was affected by a recent European Union tax ruling, resulting in a substantial one-time charge.

The company recorded $94.93 billion in revenue for the quarter, reflecting a 6.1% rise from the same period last year. Despite this growth, Apple's net income dropped by 36% to $14.74 billion. This translated to earnings per share of 97 cents for the fiscal fourth quarter of 2024. Notably, this period included the debut sales of Apple's iPhone 16 family, launched on September 20, which feature new artificial intelligence capabilities.

Apple attributed part of its financial strain to a significant $10.2 billion charge related to the European General Court's State Aid decision. Excluding this charge, the company's diluted earnings per share were $1.64, beating Wall Street's expectations. This financial challenge follows the European Court of Justice’s September ruling that Apple owes €13 billion ($14.3 billion) in back taxes to Ireland due to previously granted illegal tax benefits.

iPhone sales reached $46.22 billion in the quarter, exceeding analysts’ forecast and showing an increase from $43.81 billion in the previous year. Apple's services sector also posted sales of $24.97 billion, marking a 12% year-over-year increase but falling slightly short of Wall Street's projections. This segment encompasses the App Store, Apple TV+, Apple Music, Apple Arcade, Apple News, Apple Card, iCloud, and other services, maintaining a steady operating margin of 74%.

CFO Luca Maestri highlighted that the company now boasts "well over" 1 billion paid subscriptions, including both first- and third-party services. Maestri also indicated that services revenue is expected to continue growing at a similar pace into the December quarter, before he steps down from his role.

Apple CEO Tim Cook expressed enthusiasm about the company's recent product launches, which include the iPhone 16 lineup, Apple Watch Series 10, and AirPods 4, along with new features for hearing health and sleep apnea detection. Cook emphasized the significance of Apple Intelligence, a new set of AI features that enhance privacy and performance, released alongside iOS 18.1. Apple plans to further enrich these AI capabilities by incorporating OpenAI's ChatGPT by December.

Overall, Apple's performance for the quarter exceeded Wall Street's expectations of $94.58 billion in revenue and $1.60 earnings per share. Analysts had anticipated iPhone sales to be around $45 billion and services revenue to be approximately $25.2 billion.