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Apple reports higher sales as China reopens after coronavirus but gives no forecast

by Rahul Chauhan
2 minutes read

Apple Inc reported on Thursday sales and profits that exceeded Wall Street’s expectations. Chief Executive Officer Tim Cook said sales in China were “heading in the right direction” when that country reopens of the new corona virus. But Cook said it was impossible to predict this quarter’s overall results because of the uncertainty created by the virus.

With its global brand, few U.S. companies are exposed to the spread of the coronavirus like Apple, whose iPhone sales fell in the March quarter as device sales were forced in many places to be online alone. Sales of services like streaming television content increased with billions of people locked in their homes. China, where the virus was first discovered, is both a major market for Apple, accounting for about one-sixth of total sales, and is also home to most of Apple’s contract factories. Apple saw $ 9.46 billion in China sales, down less than $ 1 billion from a year ago, a potential sign of how the company will fare as other markets emerge from lockdowns.

“When the cutout came into effect in late January, we saw a very sharp decline in the demand month in February,” Cook told Reuters. Apple slowly reopened Chinese stores, all of which reopened in mid-March. “Compared to February, we saw a nice improvement in March and a further improvement in April. China is moving in the right direction.” Apple reported revenues of $ 58.3 billion and earnings of $ 2.55 per share for the fiscal second quarter ended March, above annual results of $ 58 billion and $ 2.46, and above analyst estimates of 54.5 billion and $ 2.27, according to Refinitiv’s IBES data. Apple shares, which closed more than 2%, rose another 1.5% to $ 298.38 in extended trading.

Cook said that during the first five weeks of the fiscal second quarter, “it was an incredible time when we grew very quickly and we would essentially be at the top of our guidance” between $ 63 billion and $ 67 billion in sales. The quarter changed quickly as the virus spread in China and reached Apple’s supply chain and sales there, then reached the rest of the world when Apple’s stores and contract factories came back online. Apple broke with its usual practice to provide an estimated sales reach for this quarter. “The question is: when do shops open again, when do the shelter-in places go out, when is it comfortable to get back to work in the shops and let consumers out?” Cook said. & # 39; Instead of pretending we can project it, we’re very simple and say we don’t have the visibility to do it. & # 39;

In February, Apple warned investors that it was unlikely to meet its March financial outlook and that it could face iPhone shortages as lockdown orders in China shut down factories and forced Apple to close stores there. Apple reopened in mid-March its stores in China and factories resume production, but by that time the pandemic had spread to Europe and the rest of the world, making Apple stores outside mainland China, Hong Kong, Taiwan and South Korea closed #

The closings, along with lockdown orders in many major Apple markets such as the United States and Europe, have forced Apple and its major retail and mobile telephony sales partners to make the most sales online or by curbside pickup including the newly launched iPhone SE 2. Cook declined to comment on whether Apple is experiencing supply chain disruptions to devices released later this year, as the company does not comment on future products. He said Apple’s supply chain was “back up to speed at the end of March.”

Cook said he was satisfied with early sales of the new device, along with new Macs and iPads released during the fiscal second quarter, but Apple will be subject to wider market forces in the coming months. “We are clearly not immune to the macroeconomic environment – I’m not sure almost anyone is immune at the moment,” Cook told Reuters. “We are primarily focused on doing what we can to help the situation the world is in, and we are letting the economy take care of itself. Compared to late March and early April, we have seen a better second half of April. “

Apple said iPhone sales were $ 29.0 billion, down $ 30.9 billion the year before compared to analyst estimates of $ 28.4 billion, according to FactSet data. Sales for Apple’s service segment, which includes iCloud storage, as well as streaming music and television show services, were $ 13.4 billion, compared to analyst estimates of $ 12.9 billion, according to FactSet data. Cook said Apple had 515 million subscribers to apps and services on the Apple platform, 125 million more than a year earlier.

Apple’s wearables and accessories segment, including Apple’s AirPods and Apple Watch, was $ 6.3 billion, compared to analyst estimates of $ 6.7 billion, according to FactSet data.

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