Apple tops Wall Street expectations on record iPhone revenue, China sales surge.

Apple Inc. on Wednesday reported holiday quarter sales and profits that beat Wall Street expectations, as new 5G iPhones helped push handset revenue to a new record and sparked a 57-percent rise in China sales.

Apple shipped its iPhone 12 lineup several weeks later than usual, but an expanded number of models and new look appear to have tapped into pent-up demand for upgrades, especially in China. The firm also posted strong sales of its Mac laptops and iPads in the quarter, driven by consumers working, learning and playing from home during the pandemic.

Apple's revenue for the quarter ended Dec. 26 rose 21 per cent to US$111.44 billion. Earnings per share rose to US$1.68 from US$1.25. Analysts had expected US$103.28 billion and US$1.41 per share, according to IBES data from Refinitiv. Sales of iPhones were US$65.60 billion, compared with estimates of US$59.80 billion and beating Apple's previous quarterly all-time high of US$61.58 billion in iPhone sales for the first quarter of fiscal 2018.

Shares of Apple have risen nearly 12 per cent since Jan. 15. The results come as investors have spent the past year rethinking Apple's valuation. Apple's shares often traded at lower price-toearnings ratios than its rivals due to Apple's dependence on the iPhone. But those ratios have risen over the past year, as have valuations of other major tech firms.

Apple, the biggest U.S. listed public company by market capitalization with a value of US$2.4 trillion, has thrived through the pandemic that forced it to shutter many of its stores but prompted many consumers to buy or upgrade devices.

Apple CEO Tim Cook told Reuters in an interview that the company now has an active installed base of 1.65 billion devices, compared with 1.5 billion devices a year ago. Cook also said Apple now has an installed base of more than 1 billion iPhones, an increase over the 900 million the company most recently disclosed in 2019.

Pandemic travel restrictions disrupted Apple's product development cycle, with a late launch of its 5G devices temporarily wiping as much as US$100 billion from its market cap in October.

But even then, Cook and others were optimistic the phones would be strong sellers. The prediction proved correct, with fiscal first-quarter sales in China rising 57 per cent to US$21.31 billion, compared with US$13.58 billion a year earlier.

“We had two of the top three selling smartphones in urban China,” Cook told Reuters, adding that many of the company's other products and services also sold well. Cook said that Apple gained iPhone sales in China both from customers switching from rival Android devices as well as existing customers upgrading devices, but said “upgraders in particular set an all-time record in China.”

Mac sales reached US$8.68 billion, in line with analyst expectations of US$8.69 billion. Apple in November released its first laptop and desktop computers with processor chips of its own design, breaking a nearly 15-year partnership with Intel Corp.

Sales of iPads were US$8.44 billion compared with analyst expectations of US$7.46 billion.

Cook told Reuters that sales of Macs, iPads and the iPhone 12 Pro model all ran into “supply constraints.” He said that “semiconductors are very tight” but other areas of the supply chain contributed to the constraints as well.

The company's services business, which includes its new Apple One bundle of television, music and cloud storage services, had US$15.76 billion in revenue, compared with analyst estimates of US$14.80 billion.

Cook told Reuters that Apple has 620 million paying subscribers on its platform, ahead of its goal to have 600 million subscribers by the end of 2020.