The late launch of new 5G phones caused Apple customers to stop buying new devices, prompting the company on Thursday to report its strongest quarterly iPhone sales in two years.
Apple is down more than 5% at one point in after-hours trading, wiping $ 100 billion out of stock market value.
Since 2013, Apple has been distributing new iPhones every September like clockwork. But the pandemic-induced delay pushed the announcement back a month, with some equipment still not shipped.
Even as explosive sales of the Mac and AirPods drove more revenue and overall profits than analysts had expected, iPhone sales fell 20.7% to 26.4 billion. USD. (Graphics: https://tmsnrt.rs/3ecmgCG)
Investors expect lower sales from Cupertino, California’s best-selling product, but the holding back rate is worse than expected, especially in China, where more consumers continue access to 5G than in the US or Europe.
Apple has largely surpassed sales expectations this year and launched a host of new products and services that its customers have embraced while largely at home during the pandemic.
Apple said revenue and profit for the fiscal fourth quarter ended September 26 was $ 64.7 billion and 73 cents per share, compared with analyst estimates of $ 63.7 billion and 70. cents per share, according to IBES data from Refinitiv.
The flagship iPhone 12 announcement, however, was delayed until October 13, a few weeks later than usual, meaning that no weekend iPhone sales were counted towards fourth-quarter results .
In an interview with Reuters, Apple CEO Tim Cook said that he was “optimistic” about the iPhone 12 cycle based on shipping data of the first 5 days.
“5G is a decade-old kind of opportunity. And we couldn’t be happier hitting the market at the exact moment we did,” Cook said. “At least in the US, the carriers are operating very actively.”
The timing of the release of the iPhone 12 reduced sales in Mainland China by 28.5% to $ 7.95 billion. Cook said he hopes the new 5G devices will help iPhone sales recover in China.
“What we are seeing in the first 5 days gives us a lot of confidence that China will grow again in our financial quarter,” Cook told Reuters.
Apple didn’t release a revenue growth forecast, but Chief Financial Officer Luca Maestri said revenue from services and non-iPhone products would see double-digit growth in the fiscal first quarter, in line with expectations. of analysts. He said iPhone sales will also increase, meaning the rate will stay at one digit. Analysts expect iPhone revenue to grow 6.45% to $ 59.56 billion in the first quarter, according to Refinitiv data.
Logan Purk, an analyst at Edward Jones, said that “although iPhone sales will increase with this cycle, it will be disappointing compared to high expectations, as we don’t believe 5G is a compelling reason. for an upgrade wave. “
Apple has offset fluctuating iPhone sales in recent years with steady growth in its services segment, including music and TV streaming. Service revenue rose 16.3% to $ 14.5 billion, compared with analysts’ estimate of $ 14 billion. Cook told Reuters that the Apple One, an Apple paid subscription, will launch on Friday.
Cook told Reuters that Apple has 585 million paid subscribers on its platforms, up from 550 million in the previous quarter and closer to the company’s target of 600 million subscribers by the end of 2020.
Apple shares have skyrocketed over the past two years as they diversify revenue streams to reduce their reliance on iPhones. The shuffle shared on Thursday raises the question of whether Apple is still more dependent on iPhone sales than some investors expected.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “Apple needs to be able to maintain the upgrade cycle or the stock price will fluctuate because there is no real room to forgive the valuation current price”.
Apple said its accessories revenue increased 20.8% to $ 7.9 billion, compared with analyst estimates of 13.5% to $ 7.4 billion, according to data from Refinitiv. According to Refinitiv data, Mac and iPad sales grew to $ 9.0 billion and $ 6.8 billion, compared with an estimated $ 7.92 billion and $ 6.12 billion.
(This story has not been edited by NDTV staff and generated automatically from feed provided.)