AAPL Apple Inc

By Tripp Mickle 

Apple Inc. reported a slight uptick in revenue for its latest quarter despite the coronavirus shutting down factories and denting sales in China, as the tech giant's growing services business offset declining iPhone sales.

The company said revenue rose 1% in its fiscal second quarter to $58.3 billion, with iPhone sales momentum stalling after Apple closed stores, first in China and then world-wide. Profit fell about 3% to $11.25 billion, or $2.55 a share.

The results exceeded analysts' revised expectations for nearly $55 billion in revenue but fell short of the company's pre-pandemic projections for more than $63 billion for the three months ended March 28.

In the face of historic economic uncertainty, Apple declined to project sales for its current quarter for the first time since it began providing concrete revenue guidance in late 2003. The omission means Apple can avoid having to revise its sales projections in the coming months -- an action it had to do twice in the past two years because of unexpected economic downturns in China.

"Apple is one of very few companies that can survive Armageddon because their balance sheet is in better shape than Uncle Sam," said Mike Frazier, president of Bedell Frazier Investment Counselling, a Walnut Creek, Calif.-based firm with about $500 million under management.

The quarter's results highlight the strengths of big technology companies even during an economic crisis that has rocked markets around the world and put corporations to the test. Some have seen increased business as the virus keeps people at home. Facebook Inc. and Microsoft Corp. on Wednesday reported higher revenue and signaled more gains in the current period as homebound social-media usage swells and cloud-computing rises. Google parent Alphabet Inc. last week posted revenue gains but provided a sober outlook, saying it experienced a sudden slowdown in ad sales in late March.

Apple's performance also underscored the value of its strategic shift from selling more devices to selling more software and services across those devices. For the quarter, the company's sales from services rose nearly 17% to $13.35 billion, offsetting a 3.4% decline in its legacy hardware products such as iPhones, iPads and Macs, which reaped sales of $44.97 billion.

The company's wearables business posted sales growth of 23% to $6.28 billion behind strong demand for AirPods wireless earbuds and smartwatches.

"Amid our most challenging global environment in which we've ever operated our business, we're proud to say that Apple grew," Chief Executive Tim Cook said Thursday. He said the results speak to Apple's "durability as a business and the enduring importance of our products in our customers' lives."

Apple said it would add $50 billion to its continuing share-buyback program, a decrease from last year's addition of $75 billion but still a sign of its commitment to return capital even as buybacks have become controversial in the U.S. Its board also approved a 6% increase in its quarterly dividend to 82 cents a share, building on last year's 5% increase.

Mr. Frazier said the buybacks and dividend increases will instill confidence in Apple's "rock solid balance sheet."

The results suggest the economic damage from the pandemic may not be as bad for some companies as feared. Apple, which relies on China for nearly a fifth of total revenue and for almost all of its manufacturing production, had high exposure to the economic fallout there as it became the first country to lock down its economy to curtail the outbreak. Apple's sales fell 7.5% to $9.46 billion across its Greater China region, which includes Hong Kong and Taiwan -- a far-less-dramatic downturn than, for example, the 90% same-store sales decline Starbucks Corp. reported Monday.

Still, Apple's dependency on China to make almost all of the iPhones it sells world-wide proved a challenge as February factory closures disrupted production. The stoppage delayed the release of the iPhone SE by a month, according to analysts, pushing sales of the smartphone out of the March quarter when it was expected to lift revenue. A two- to three-week shutdown of factories also slowed shipments and sales of iPhones outside China, according to analysts.

The company reported iPhone sales fell 7% to $28.96 billion in its March quarter.

Apple offset declines in China with strong sales in the U.S. and Europe, where shutdowns didn't begin until the final weeks of the March quarter. Apple relies on the U.S. and Europe for about two-thirds of total sales, and those economies are now suffering historic contractions that could lead to an unprecedented drop in sales for Apple if those markets trace China's decline in the March period.

"Few companies are able to outrun this pandemic, and Apple is no exception," said Daniel Flax, senior research analyst at Neuberger Berman, an investment manager with $356 billion in assets under management that counts Apple among its holdings.

Despite the near-term challenges, Mr. Flax said Apple stands to gain in the future with critical products for people working remotely and a strong balance sheet to fund innovation.

Apple has been quick to react as the coronavirus outbreak gathered speed.

In February, it became one of the first companies to signal trouble ahead, saying it wouldn't meet its revenue projections because of weak demand in China and supply shortages. It also closed its China stores that month and later extended the shutdown to all stores world-wide in mid-March. The company has since reopened stores in China and elsewhere such as South Korea, although U.S. stores remain closed.

After the virus hit the U.S., Apple donated 20 million masks to health-care workers and partnered with Google to create software that enables smartphones to help track the spread of the virus.

The company this month added the $399 iPhone SE to its lineup, its lowest-priced model since 2018 when it discontinued a previous low-end model bearing the same name. The phone, which had been in development long before the pandemic, now offers iPhone owners a more affordable upgrade option at a time when many are being pinched by economic troubles. It arrived less than six months after Apple lowered the price of its most popular iPhone model by $50, countering years of price increases and helping fuel a rebound in sales during the December quarter.

The Wall Street Journal reported Monday that Apple is pushing production of this year's flagship iPhones back by a month, which could delay sales of those devices from September until October or later. It also is cutting production volume for the four new models by about 20% as the coronavirus weakens consumer demand.

Despite the production challenges, Apple managed to release new devices, including an updated MacBook Air and iPad Pro in mid-March that helped bolster those businesses in the quarter. Mac sales fell 3% to $5.35 billion, while iPad sales fell 10% to $4.37 billion.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

April 30, 2020 17:45 ET (21:45 GMT)

Apple (NASDAQ:AAPL)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024

Apple (NASDAQ:AAPL)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024