CORPORATE FORTUNES

Apple Profit Falls On Hardware Hit

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Services proved a bright spot for Apple in the company’s fiscal Q2 2020 (covering 29 December 2019 to 28 March), as sales declines across most of its hardware portfolio related to the Covid-19 (coronavirus) pandemic dragged profit down 2.5 per cent year-on-year.

On an earnings call, CEO Tim Cook acknowledged “this may not have been the quarter it could have been absent this pandemic”, but added “I don’t think I can recall a quarter where I’d been prouder of what we do or how we do it”.

Net income of US$11.2 billion was down from US$11.5 billion in the comparable quarter of 2019, with revenue up 1 per cent to US$58.3 billion. In January, the company predicted revenue of between US$63 billion and US$67 billion for the quarter, but pulled the guidance in mid-February as the pandemic took hold.

Its primary revenue generator remained the iPhone, though sales dropped 6.7 per cent to US$28.9 billion. Mac revenue fell 2.9 per cent to US$5.3 billion, and iPad sales of US$4.4 billion were 10.3 per cent lower.

Wearables, Home and Accessories was Apple’s only hardware segment to grow, with revenue up 22.5 per cent to US$6.2 billion. Services also posted double-digit gains, with sales up 16.6 per cent to US$13.3 billion.

Rocky road

Though it did not release guidance for the current quarter, CFO Luca Maestri warned Apple expects its iPhone and Wearables segments to perform worse. He tipped Mac and iPad performance to improve, but said Services will be a mixed bag.

He added revenue headwinds of more than US$1.5 billion due to the appreciation of the US dollar are also likely.

Of its strategy going forward, Cook said: “We’ve always managed through difficult moments by doubling down and investing in the next generation of innovation. And that’s our strategy today.”   -Mobile World Live

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