Apple sees profit and iPhone sales decline

BERKELEY, California — Apple’s profit dipped slightly while revenue rose in the January-March quarter, reflecting early fallout from a coronavirus pandemic that shut down its factories and then forced hundreds of Apple retail stores to close.

The results released Thursday give the first sign of how one of the world’s best-known companies is faring as the U.S. economy plunges into recession.

Apple CEO Tim Cook said the current downturn could be harder on the company than what it experienced during the recession of 2007-2009.

The current conditions represent “the most challenging global environment in which we’ve ever operated,” Cook said.

Apple’s revenue edged up by 1% from the same time last year to $58.3 billion US during the company’s fiscal second quarter. The iPhone was the company’s hardest-hit segment, with sales for the device falling 7% from the same time last year. Apple’s profits fell to $11.2 billion, a 2% decline from last year. The company told investors Thursday that iPhone sales will deteriorate even further during the April-June quarter.

The numbers were far better than analysts, who were braced for a 6% revenue decline, had feared. “Investors were expecting a Friday-the-13th-like quarter,” Wedbush Securities analyst Daniel Ives said.

Those worries appeared well founded. That’s because Apple’s supply chain was already constrained by the pandemic’s early outbreak in China, which forced the company to temporarily close its factories there.

The factories in China are open and operating again, but the closures created ripple effects that are expected to delay the fall release of Apple’s next iPhone models by at least a month. Apple’s stores still remain closed in many parts of the world as part of efforts to limit the spread of COVID-19.

The numbers offered a sobering reminder of how much the world has changed in just three months. In late January, Apple’s stock price hit its all-time high $327.81 and management had forecast its revenue for the first three months of the year might reach $67 billion.

Now, everything is so uncertain that Apple isn’t making any forecasts for the coming quarter.

Overall, Apple remains in an enviable position. It is bolstered by a strong brand, $94 billion in cash and a loyal customer base.

That’s a big reason why Apple’s stock still remains above its levels of just five months ago. The shares shed 2% to $288.10 in Thursday’s extended trading after the quarterly numbers came out.

To help prop up the stock during the downturn, Apple plans to spend $90 billion buying back its own shares and also announced a 6% increase in its quarterly dividend to 82 cents per share.

A recently released cheaper iPhone could also help insulate the company. The second-generation iPhone SE starts at almost $400, a relative bargain given that other models sell for $700 to $1,000.