Apple reports higher sales and profits as China reopens

Apple reported sales and profits that beat Wall Street expectations, with Chief Executive Officer Tim Cook saying China sales were “headed in the right direction” as that country reopens from the novel coronavirus.

But Cook said it was impossible to forecast overall results for the current quarter because of uncertainty created by the virus.

With its global brand, few American companies have been exposed to the spread of the coronavirus like Apple, whose iPhone sales declined in the March quarter as device sales were forced to online-only in many places. Sales of services such as streaming television content rose with billions of people locked in their homes. China, where the virus was first detected, is both a major market for Apple, supplying about a sixth of its overall sales, and is also home to most of Apple’s contract factories.

Apple saw China sales of $9.46 billion, down less than a $1 billion from a year ago, a potential sign of how the company will fare as other markets emerge from lockdowns.

“When the lockdown went into effect at the end of January, we saw a very steep falloff in demand for the month of February,” Cook told Reuters. Apple slowly reopened Chinese stores, with all running again by mid-March. “As compared to February, we saw a nice improvement in March and a further improvement in April. China is headed in the right direction.” Apple reported sales of $58.3 billion and earnings of $2.55 per share for its fiscal second quarter ended in March, above year-ago results of $58 billion and $2.46, and above analyst estimates of $54.5 billion and $2.27, according to IBES data from Refinitiv.

Cook said that during the first five weeks of the fiscal second quarter, “it was an incredible time where we were growing very fast and we were set to essentially come in at the high end of our guidance” of between $63 billion and $67 billion in sales. The quarter quickly changed when the virus spread in China, hitting Apple’s supply chain and sales there, and then hit the rest of the world as Apple’s stores and contract factories came back online. Apple broke with its usual practice of providing an estimated range of sales for the current quarter.

Reuters