Apple reports higher sales as China reopens after coronavirus
Results ‘headed in the right direction’: Cook
SAN FRANCISCO Apple Inc reported sales and profits that beat Wall Street expectations Thursday, with chief executive Tim Cook saying China sales were “headed in the right direction” as that country reopens from the novel coronavirus.
But Cook said it was impossible to forecast overall results for the current quarter because of uncertainty created by the virus.
With its global brand, few American companies have been exposed to the spread of the coronavirus like Apple, whose iphone sales declined in the March quarter as device sales were forced to online-only in many places.
Sales of services such as streaming television content rose with billions of people locked in their homes. China, where the virus was first detected, is both a major market for Apple, supplying about a sixth of its overall sales, and is also home to most of Apple’s contract factories.
Apple saw China sales of US$9.46 billion, down less than a US$1 billion from a year ago, a potential sign of how the company will fare as other markets emerge from lockdowns.
“When the lockdown went into effect at the end of January, we saw a very steep falloff in demand for the month of February,” Cook told Reuters.
Apple slowly reopened Chinese stores, with all running again by mid-march. “As compared to February, we saw a nice improvement in March and a further improvement in April. China is headed in the right direction.”
Apple reported sales of US$58.3 billion and earnings of US$2.55 per share for its fiscal second quarter ended in March, above year-ago results of US$58 billion and US$2.46, and above analyst estimates of US$54.5 billion and US$2.27, according to IBES data from Refinitiv.
Cook said during the first five weeks of the fiscal second quarter, “it was an incredible time where we were growing very fast and we were set to essentially come in at the high end of our guidance” of between US$63 billion and US$67 billion in sales.
The quarter quickly changed when the virus spread in China, hitting Apple’s supply chain and sales there, and then hit the rest of the world as Apple’s stores and contract factories came back online. Apple broke with its usual practice of providing an estimated range of sales for the current quarter.
“The question is: When do stores reopen, when do the shelter-in-places come off, when is it comfortable to go back to working in stores and having consumers come out?” Cook said. “Rather than pretend we can project it, we’re being very straightforward and saying we lack the visibility to do it.”
In February, Apple warned investors that it was unlikely to meet its financial guidance for the March quarter and could face iphone shortages as lockdown orders in China kept factories closed and forced Apple to shutter its stores there.