Apple beats profit and revenue estimates to defy coronavirus fears
Apple reported earnings and revenue above Wall Street estimates tonight, proving its streak of success had continued to rise during the crucial Christmas trading period.
The iPhone creator reported earnings of $4.99 per share for the three months to the end of December 2019, above estimates of $4.55 per share. It marked a record profit of $22.2bn, the largest Apple has posted for any quarter to date.
Revenue came in at $91.8bn compared to estimates of $88.5bn, a rise on nine per cent year on year and trouncing Apple’s own guidance for the quarter. New iPhone models released in September powered much of its sales increase, climbing eight per cent to $56bn.
The tech giant said for the upcoming quarter it expected revenue of between $63bn and $67bn, compared to analyst estimates of $62.45bn.
The beat cheered investors who had been looking to evaluate any potential impact from coronavirus, which could affect Apple’s production in China. Shares jumped more than 2.7 per cent in after-hours trading, having finished the session up more than 2.8 per cent.
However the range of Apple’s guidance had widened compared to previous quarters, which chief executive Tim Cook said was down to the unpredictable nature of the virus’ rapid spread across China and other countries.
“There’s more uncertainty, it’s a very fluid situation,” Cook told CNBC.
Its services wing, which accounts for revenue from its promising cloud business and other ventures such as Apple TV Plus and Apple Music, was up 17 per cent year on year to $12.7bn. This came in slightly below estimates of $13.07bn, following the debut of Apple TV Plus in the quarter and the success of original content such as The Morning Show.
Soaring demand for additional products such as its Apple Watch and Airpods led its wearables segment to hit $10bn in revenue versus estimates of $9.5bn, up sharply from $7.3bn the year before.
Bernstein analyst Toni Sacconaghi wrote in a note to clients that sales of Airpods alone — a metric Apple does not disclose — may have reached $3.5bn to $4bn in the December quarter, a rise of 150 per cent from the year before.
Apple’s share price has more than doubled since Cook warned a year ago that the company was likely to miss financial targets for its biggest sales quarter of its fiscal 2019.
In the year since, Apple slashed prices in China to rekindle sales, made a push into paid services, rolled out a credit card with Goldman Sachs and subscription gaming and television services.
Cook told Reuters that Apple could not make enough Airpods and Apple Watch Series 3 devices to meet demand during the current quarter, and continues to be short on both. He could not provide an estimate for when it will be able to fulfil demand for either product.
“Apple is continuing its strong momentum from 2019 and carrying it into the new year. Having joined the exclusive $1 trillion dollar club last year, the expectations were high for the latest returns and they have delivered,” said Alec Dafferner, partner at tech advisory and investment firm GP Bullhound.
Hargreaves Lansdown analyst Sophie Lund-Yates added: “Sustained growth in physical products is a core part of Apple’s story, because it feeds into a lucrative web.”