Apple profit slides as iPhone sales fall

Apple’s profit dipped slightly while revenue rose in the JanuaryMarch 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 bestknown companies is faring as the U.S. economy plunges into its first recession in more than a decade.

Apple CEO Tim Cook said the current downturn could be harder on the company than what it experienced during the recession of 200709, when people were still captivated by the thennew iPhone.

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

Apple’s revenue edged up by 1% from the same time last year to $58.3 billion during the company’s fiscal second quarter. To no one’s surprise, the iPhone was hardest hit, with sales of the device falling 7% from the same time last year. Apple’s profit 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 AprilJune quarter.

The numbers were far better than analysts, who were braced for a 6% revenue decline, had feared.

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 factories that make most of its iPhones and other products.

The factories in China are open and operating at normal levels 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 remain closed in many parts of the world as part of efforts to limit the spread of COVID19.

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

Now, everything remains so uncertain that Apple isn’t making any forecasts for the coming quarter, although it’s clear that it will be worse than this one.

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

The shares fell 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 shares. It also announced a 6% increase in its quarterly dividend to 82 cents per share.

Apple might be hurting even more had the company not spent the past few years developing subscription services for the owners of more than 1 billion iPhones and other products that are still in use. The services division, which includes Apple Music and video streaming service Apple TV Plus, generated revenue of $13.3 billion, up 17% from last year.

A recently released iPhone SE model, which sells for a relatively bargain price of almost $400, could boost sales by appealing to people who need a new phone during tough times.