A drop in sale of its products in China could not stop Apple Inc to report growth in the first three months of the year as there was a surge in demand for its streaming services as more and more people remained confined to their homes because of the coronavirus lockdowns.
Sal revenues of the company in during the quarter increased to $58.3bn from $58bn in the same period a year ago and beat estimates of analysts of revenues of 54.5bn.
The company saw a “record for streaming” and “phenomenal” growth in the online store, said Apple boss Tim Cook. “China is headed in the right direction,” he added.
“I don’t think I can remember a quarter where I’ve been prouder of Apple,” Cook told investors in an earnings call about the results even though the company was hit by disruption to its iPhone supply due to Chinese factories closing as the coronavirus pandemic hit the country during the first three months of the year as well as a drop in demand and sale of its devices in China – which is the largest market for the company outside of its home market of the United States.
There was a 7.2 per cent drop in sale of iPhones, Apple said, dropping to revenues of $28.9bn, compared to revenues from iPhone sale of $31bn reported by the company in the same quarter a year ago.
However there was an increase of 22 per cent in revenues from its wearables, home and accessories division, which manufactures the Apple Watch and AirPods, to reach a total of $6.3bn. There was a 16.6 per cent growth in revenues from its services, such as subscriptions to Apple Music and Apple TV, to touch $13.3bn like-for-like.
Even though there has not been a complete rebound of apple’s China business, the company had reopened all of its stores in the country by mid-March and sales were improving, Apple said.
The company reported an increase of 6.2 per cent in the net income for the six months ending 28 March 2020 to $33.5bn compared to $25.9bn in the same period in the previous year.
The position of Apple was strong and its supply chain was “robust” and “back up and running at full-throttle at the end of March”, Cook said.
“While we can’t say for certain how many chapters are in this book, we can be assured that the ending will be a good one,” he told investors.
Due to the ongoing uncertainties of the lockdown, which has impacted the sale of the company and prompted shifting of the sale from physical stores to online, Apple did not issue any forecasts for the following quarter, Apple said.
Apple’s performance was “pretty solid”, said Research firm eMarketer’s principal analyst Yoram Wurmser.
“Growth of 1% in this environment is impressive, particularly given some of the extent of Apple’s exposure to the earlier lockdowns in Asia,” said Wurmser.
“The biggest bright spot for Apple was services, which grew 17% year-over-year. As people spent more time on their phones while locked away at home, they clearly were spending more money in the App Store and on some of the subscription services offered by Apple, including Apple Music and Arcade.”
(Adapted from BBC.com)