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Shares of Apple Inc. fell more than 3% in extended trading after executives’ cautious outlook overshadowed quarterly revenue that first exceeded $ 100 billion.
Although the company has not provided an official forecast for the fourth quarter in a row, executives said sales growth for AirPods and other wearable devices will slow in the current quarter. They also warned that service sales during the period will face more difficult comparisons to a year earlier.
“It was an extremely solid quarter. What’s probably weighing on the stock right now is that they haven’t given any guidance, ”said Shannon Cross of Cross Research.
Sales jumped 21% to $ 111.4 billion during the period ended Dec. 26, the company said on Wednesday in a declaration. Analysts were expecting an average of $ 103.1 billion, according to data compiled by Bloomberg. Earnings were $ 1.68 per share, also beating Wall Street estimates.
Apple’s expectations have been very high when it comes to suggestions of a new iPhone “super cycle”, where millions of existing users are upgrading aging phones. The company also recently introduced other new devices, including an updated Apple Watch, and demand has increased for iPads, Mac computers, and services from consumers working and studying from home during the pandemic. The stock had jumped more than 20% in the past three months, closing Wednesday at $ 142.06 in New York.
Revenue was propelled by the iPhone 12, the first iPhone lineup to include four new models and 5G capabilities. Handset sales hit $ 65.6 billion, easily beating Wall Street estimates of $ 60.3 billion. Consumers were drawn to the 5G capabilities, especially in China, and the improved camera features of the Pro models.
“This iPhone sales force proves to Apple Bulls that another iPhone super cycle may be in the cards,” Dan Morgan, senior portfolio manager at Synovus Trust Company. The last super cycle happened with the iPhone 6 in 2014 and launches since then “felt more like ripples opposed to a wave, ”he added.
In a conference call with analysts, CEO Tim Cook and CFO Luca Maestri were confident about the iPhone business. They said the more expensive iPhone 12 Pro and iPhone 12 Pro Max models with better cameras sold particularly well. Executives also pointed to strong sales in China, saying there was pent-up demand for iPhones with 5G capabilities.
Apple also said the number of active devices exceeded 1.65 billion in the first fiscal quarter, which includes more than one billion active iPhone users. Cook added that Apple saw the most upgrades ever made during the period and Noted that the switch to other smartphones was also strong.
Beyond the iPhone, Apple reported iPad sales of $ 8.44 billion, beating expectations by $ 7.58 billion. The company released a redesigned iPad Air and a faster entry-level model during the quarter. Mac sales were $ 8.68 billion, with no estimate of $ 8.86 billion. This comes despite Apple launching a new MacBook Pro, Mac mini, and MacBook Air in the quarter.
“They were probably limited during the quarter. There are still significant delays in shipments for some models, ”said Cross.
The influx of new hardware purchases has also driven strong growth in the services segment, which includes the App Store, iTunes, Apple Music and iCloud. The company reported $ 15.8 billion in services in the quarter, beating estimates of $ 14.9 billion.
The company pointed to the strong growth in iCloud, Apple Music and App Store subscriptions, but did not provide details on the performance of TV +, its new video streaming service. The company recently extended TV + free trials for several months.
Apple launched four major new products during the quarter in its Wearables, Home, and Accessories segment: the Apple Watch Series 6, Apple Watch SE, the HomePod mini speaker, and AirPods Max headphones. These devices gave Apple its best quarter to date for this segment with revenue of $ 12.97 billion. Analysts estimated $ 11.84 billion.
Apple has seen significant growth in all major geographies, including Greater China, where sales jumped to $ 21.3 billion from $ 13.6 billion a year ago. The company reported sales of $ 46.3 billion in the Americas region, up about $ 5 billion from the previous year.
(Updates with CEO, CFO comments on more expensive iPhones in the ninth paragraph.)
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