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. Shares fell 2.4% to $ 286.56 on extended trading.
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 subscription services such as streaming TV content increased by billions of people locked in their homes, bringing the total number of subscribers to paid apps and services on Apple devices to 515 million. 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. 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,” Cook told Reuters in an interview.
Apple reported total revenues of $ 58.3 billion and a profit of $ 2.55 per share for the fiscal second quarter ended March, above the $ 58 billion and $ 2.46 results last year, and above estimates of analysts at $ 54.5 billion and $ 2.27, according to Refinitiv’s IBES data. Cook said in 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.
But the quarter changed quickly, and Apple broke with its usual practice of providing an estimated sales reach for the current quarter. “Instead of pretending we can project it, we’re very simple and say we don’t have the visibility for it,” Cook told Reuters.
Apple stores outside mainland China, Hong Kong, Taiwan and South Korea remained closed. In an interview with Bloomberg Television, Cook said that Apple plans to reopen stores in Austria and Australia in one to two weeks and a small number of stores in the United States in the first half of May. Lockdowns forced Apple to release its latest iPhone SE 2 primarily through online sales. Cook said he was satisfied with early sales of the new device, along with new Macs and iPads released during fiscal Q2. “Compared to late March and early April, we have seen a better second half of April,” Cook told Reuters.
Cook declined to comment on whether Apple will face supply chain disruptions for devices released later this year. He said Apple’s supply chain was “back up to speed at the end of March.” Apple also said on Thursday that it would repurchase another $ 50 billion of its own shares, a smaller figure than in previous updates to its capital return program, but “we expect them to use those funds aggressively,” said Brian Pirri, a director at Apple shareholder New England Investment and Retirement Group. “They’ve also managed to do all this with a drawdown of just $ 14.3 billion on their cash, which is still a whopping $ 192.8 billion.”
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. Cook said in a conference call with analysts that Apple News reached 125 million monthly active users, up from 100 million in January.
“The group was silent on AppleTV + and we’re wondering how many subscribers were added in the quarter, especially after updates from rivals like Netflix and Disney +,” said Sophie Lund-Yates, a stock analyst at Hargreaves Lansdown. 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.