Apple reports strong iPhone sales for the holiday quarter

Apple reports strong iPhone sales for the holiday quarter
Apple has just released the results of its fiscal first-quarter which covered the holiday shopping season of October through December 2019. With Wall Street expecting the company to report iPhone revenue of about $52 billion for the three months, the actual number was $55.96 billion. That is the second highest quarterly revenue figure for Apple's iconic handset trailing only the holiday shopping season of 2017.

What this means is that all of the things that Apple did to improve the iPhone in 2019 such as increasing the battery life, taking photography to another level using computational imaging (Deep Fusion), and improving the new lines' protection from water and drops, all touched a chord with consumers. Back in September following the unveiling of the iPhone 11 family, we noted that Apple really listened to its fans and it has paid off with the 8% year-over-year gain in iPhone revenue. The new 2019 iPhones had a 98% satisfaction rate among U.S. consumers and U.S. iPhone revenue for the quarter set a new record. Meanwhile, after two consecutive quarters of growth, Apple saw iPad revenue decline by 11.2% year-over-year to $5.98 billion.

The Wearables unit remains Apple's fastest-growing division

The strong growth in the Wearables, Home and Accessories sector continued. This unit, which includes the popular Apple Watch and the wireless Bluetooth AirPods, generated revenue of $10.01 billion during the quarter, up 37% on an annual basis. That is slower than the 54% growth seen by the unit last quarter but it remains Apple's fastest-growing division. During the quarter, Apple introduced its premium AirPods Pro model with a new design, longer battery life, and Active Noise Cancellation.

The Services group, which Apple has been focusing on to take advantage of the large number of active iPhone units worldwide, saw revenue rise 17% to $12.72 billion. Apple hopes to generate $50 billion in Services revenue this fiscal year and at the fiscal Q1 pace it will just make it. This group includes the App Store, Apple Music, Apple Arcade, Apple TV+, Apple News+, Apple Pay, iCloud and Apple Care. The company says that it now has 1.5 billion active devices in use which we believe indicates that there are close to 1 billion active iPhone users globally.

Sales in China rose 3.1% on an annual basis to $13.58 billion during the quarter. Apple did well in Europe with sales rising 14.3% to $27.23 billion. In the Americas, the company took in $41.37 billion which was 12% higher than the previous year's figure. Of Apple's major regional units, only Japan reported lower revenue for the quarter.

For Apple's fiscal first quarter, the company had $91.82 billion in revenue and net income of $22.24 billion (an all-time record for Apple). That is an 11.4% rise in net income from last year's figure and works out to earnings of $5.04 a share. Apple CEO Tim Cook called it a "Blockbuster quarter" and after rising $8.74 during regular trading hours, Apple's shares tacked on an additional $3.76 to $321.45 after-hours after the report was released. That is a new all-time high for the stock.

Apple CEO Tim Cook, commenting on the quarterly report, said, "We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables. During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers and a great driver of our growth across the board."

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Apple's estimates for the fiscal second quarter are wider than usual due to the possible effects of the deadly coronavirus that has hit China killing 100 people in that country. The company estimates that it will report revenue between $63 and $67 billion for the three months between January and March.

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