Sales of the iPhone have raised Apple’s profits beyond expectations, with Asia (excluding China and Japan) being a bright spot.
Apple announced higher-than-expected quarterly revenue and profits, with iPhone sales rising and wearable device sales falling less than analysts had feared. Apple’s sales for the fiscal second quarter ending in April fell 2.5% to $94.84 billion, exceeding analysts’ expectations of a 4.4% decline to $93 billion, according to Refinitiv data.
The company recorded profits of $24.15 billion compared to about $25 billion in the previous year. Profits were steady at $1.52 per share, compared to estimates of a 5.7% decline to $1.43 per share.
Apple’s CFO Luca Maestri blamed “significant foreign exchange headwinds,” saying they represented 5.4% of the revenue damage. He said that at constant currency, revenue would have grown by 3%.
Maestri added that Apple witnessed a “significant acceleration in iPhone revenue from December to March.”
Sales of the device, which represents 54% of total revenue, rose 2% in the first quarter to $51.3 billion, exceeding estimates of $48.9 billion.
At the regional level, Asia, excluding China and Japan, was a bright spot, with revenue there jumping 15.3% to $8.1 billion.
Apple CEO Tim Cook told Reuters that the company had set a record for iPhone sales in the fiscal second quarter, with some credit going to new user acquisitions in markets like India, where Cook recently turned to open the company’s first retail stores.
Cook said, “We were thrilled with our performance in emerging markets. We set records for the installed base of iPhone in every geographic segment, and our sales were very strong in emerging markets, particularly Brazil, India, and Mexico.” He added that supply chain crises had disappeared.
Device sales decline
However, not all of Apple’s electronics business was immune to the recession, as Mac sales declined sharply, while iPad revenues also declined. Sales in China fell 2.9% to $17.8 billion, which is a slightly larger decline than total revenue.
The biggest growth sector for Apple was the services sector, which includes products like iCloud and Apple Pay, growing 5.5% to $20.9 billion, in line with analysts’ expectations.
When asked about Apple’s efforts in artificial intelligence, a growing field that some observers fear is lagging behind efforts by Microsoft and Alphabet, Cook said that AI was “huge” for Apple’s future and that the company was making “tremendous progress in integrating AI and machine learning throughout our ecosystem.”
“I think it’s really important that the way we approach these things is thoughtful,” Cook said.
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