Apple beats estimates despite virus obstacles
But future sales look shaky as economy remains on standstill
Apple said Thursday that despite the impact of the coronavirus crisis around the world, it managed to report better-than-expected earnings and sales during the first three months of the year, due in part to gains in its services and accessories business and the gradual reopening of China.
But, the Cupertino-based technology giant didn’t give any sales outlook for its current business quarter, as its retail stores in the United States and most of the world remain closed, and uncertainty remains over how quickly to reopen the U.S. economy while also stemming the spread of the coronavirus.
Speaking on a conference call to discuss Apple’s results, Chief Executive Tim Cook said, “This is the most challenging economic environment we have ever operated in, ” but that he still remained confident in Apple’s long-term business potential.
Apple said that for its second fiscal quarter, which ended March, it earned $2.55 a share, on $58.3 billion in revenue, compared to Wall Street analysts’ forecasts for a profit of $2.27 a share, on $54.5 billion in sales. During the same period a year ago, Apple earned $2.46 a share, on revenue of $58.02 billion.
“In light of the COVID-19 pandemic, a global lockdown, with stores closed across the globe, we would characterize these results as a major feat,” said Dan Ives, managing director at Wedbush Securities. “Not giving guidance is prudent as Ap
ple remains in the eye of the demand storm.”
While Apple was able to say it beat Wall Street’s earnings and sales outlooks, and grow its business from a year ago, the results were also far below the company’s January estimate for sales of $63 billion to $67 billion. In February, Apple said it didn’t expect to meet that forecast because several of its main product suppliers had to temporarily shut down their operations in China in an attempt to control the spread of coronavirus in that country. Apple also closed all of its retail stores in China for several weeks before reopening the locations on March 13.
Cook also said that since the pandemic began, Apple has been able to source more than 30 million face masks to frontline healthcare workers, and is shipping more than 1 million face shields a week to medical professionals who are treating coronavirus patients around the world.
“I don’t think I can recall a quarter where I have been more proud of what we do,” Cook said.
Apple’s iPhone business remained the company’s biggest source of revenue, with almost $29 billion in sales during the quarter, but that amount fell from $ 31 billion a year ago as consumers tightened their belts due to the cloudy economic outlook brought on by the coronavirus situation.
Services, such as subscriptions to Apple Music, Apple TV+ and iCloud storage plans remain an area of growth for Apple, and rose more than 16% from a year ago, to a quarterly record high of $13.35 billion. Sales of accessories and wearables, including Apple Watches, rose by 22.5% from a year ago, to $6.28 billion.