By Stephen Nellis
(Reuters) – Apple Inc. on Wednesday reported holiday sales and profits that exceeded Wall Street expectations, as the new 5G iPhones helped boost handset revenue to a new record and generated an increase 57% in sales in China.
Apple shipped its iPhone 12 line several weeks later than usual, but more models and a new look have met the pent-up demand for updates, especially in China. The company also posted strong sales of its Mac laptops and iPads in the quarter, driven by consumers who worked, learned and played at home during the pandemic.
Apple’s revenue for the quarter ended December 26 grew 21% to $ 111.44 billion. Earnings per share rose from $ 1.25 to $ 1.68, exceeding Wall Street targets, according to IBES data from Refinitiv. Sales of iPhones were $ 65.60 billion and hit a record set three years ago. (Graphic: https://tmsnrt.rs/3prAlRd)
CFO Luca Maestri told investors that revenue growth is likely to accelerate on a year-over-year basis in the current second fiscal quarter and that gross margins are likely to be similar to the first-quarter tax rate of 39.7%. He also said that the company’s service segment revenue faced a difficult comparison with the previous year, when the pandemic increased sales, and that the company’s year-on-year growth in the wearable segment would decline.
Apple shares fell 2.6% to $ 138.33 after-hours trading after the report, but have risen nearly 12% since January 15. Apple’s shares rose 85% from the previous year, against 46% for the Nasdaq 100, of which it is a component.
“Their challenge is to maintain success to justify the now premium rating,” Trip Miller, managing partner at Apple investor Gullane Capital Partners.
Apple, the largest publicly listed company in the United States by $ 2.4 trillion in market capitalization, thrived during a pandemic that forced it to close many of its stores, but prompted many consumers to buy or upgrade devices .
Apple CEO Tim Cook told Reuters in an interview that the company now has an active installed base of 1.65 billion devices, compared with 1.5 billion devices a year ago. Cook also said that Apple now has an installed base of more than 1 billion iPhones, an increase from the 900 million that the company most recently released in 2019.
China has proven to be a strong market for the iPhone, with global sales growing 57% to $ 21.31 billion.
“We had two of the three best-selling smartphones in urban China,” Cook told Reuters in an interview, adding that “the updaters in particular have set a historical record in China.”
Mac sales reached expectations of $ 8.68 billion. Sales of iPads, services and wearables exceeded Wall Street’s goals. IPad revenue was $ 8.44 billion and the services business, which includes its new Apple One package of television, music and cloud storage services, had revenue of $ 15.76 billion.
Cook told Reuters that sales of Macs, iPads and the iPhone 12 Pro model faced “supply constraints”. He said that “semiconductors are very rigid”, but that other areas of the supply chain have also contributed to the restrictions.
Apple has 620 million paying subscribers on its platform, ahead of its goal of having 600 million subscribers by the end of 2020, Cook said.
The service segment also includes sales of Apple’s App Store, whose collection practices have become a point of conflict with “Fortnite” creator Epic Games, and whose privacy rules have sparked a public feud with Facebook Inc.
The Apple wearables and accessories segment, which includes the Apple Watch and AirPods product lines, reached $ 12.97 billion in revenue. Apple launched AirPods Max, a $ 550 set of wireless headsets in December, with shipping dates that span months into the future, just hours after the product’s launch. Cook said the lack of supplies for AirPods Max could continue into the company’s current fiscal second quarter.
(Graphic: https://tmsnrt.rs/2Mwb7Tr)
(Reporting by Stephen Nellis in San Francisco; Additional reporting by Subrat Patnaik in Bengaluru; Editing by Lisa Shumaker and Peter Henderson)