The shares of Apple Inc. declined more than 3% in long-term trading after cautious executives outlook overshadowed quarterly sales that first topped $ 100 billion.
While the company has not made an official forecast for the fourth straight quarter, executives said revenue growth for AirPods and other wearables will slow in the current quarter. They also warned that Services sales will be heavier over the period compared to a year earlier.
“It was an exceptionally strong quarter. What is likely weighing on the stocks right now is that they were not providing guidance, ”said Shannon Cross of Cross Research.
Sales were up 21% to $ 111.4 billion in the period ending Dec. 26, the company said in a Wednesday statement. Analysts expected an average of $ 103.1 billion, according to data collected by Bloomberg. Earnings were $ 1.68 per share, above Wall Street estimates.
Apple’s expectations were sky-high about suggestions for a new “super cycle” of the iPhone, with millions of existing users upgrading legacy handsets. The company also recently introduced other new devices, including an updated Apple Watch, and demand for iPads, Mac computers and services from consumers working and studying at home during the pandemic increased. The stock was up more than 20% in the past three months, closing at $ 142.06 in New York on Wednesday.
Sales were driven by the iPhone 12, the first iPhone line with four new models and 5G capabilities. Handset sales were $ 65.6 billion, well above Wall Street’s estimates of $ 60.3 billion. Consumers were lured by 5G capabilities, especially in China, and the improved camera features of the Pro models.
“This strength in iPhone sales proves to Apple bulls that another iPhone super cycle may be in the cards,” said Dan Morgan, a senior portfolio manager at Synovus Trust Company. The last super cycle took place with the iPhone 6 in 2014 and has since launched:felt more like ripples as opposed to a wave, ”he added.
During a conference call with analysts, Chief Executive Officer Tim Cook and Chief Financial Officer Luca Maestri had confidence in the iPhone business. They said the more expensive iPhone 12 Pro and iPhone 12 Pro Max models with better cameras have been selling particularly well. Executives also pointed to strong sales in China, saying there was pent-up demand for iPhones with 5G capabilities.
Apple also said the number of active devices in the fiscal first quarter was 1.65 billion, including more than 1 billion active iPhone users. Cook added that Apple saw the largest number of upgraders ever seen in the period and noted that switching from other smartphones was also strong.
Aside from the iPhone, Apple reported iPad sales of $ 8.44 billion, which is higher than the $ 7.58 billion forecast. The company launched a refreshed iPad Air and a faster entry-level model during the quarter. Mac sales were $ 8.68 billion, while estimates of $ 8.86 billion were missing. That’s despite Apple launching a new MacBook Pro, Mac mini, and MacBook Air this quarter.
“Supply was probably limited in the past quarter. There are still significant shipping delays for some models, ”said Cross.
The influx of new hardware purchases also led to strong growth in the services segment, which includes the App Store, iTunes, Apple Music and iCloud. The company reported $ 15.8 billion in services in the quarter, which is higher than the estimates of $ 14.9 billion.
The company pointed to strong growth for iCloud subscriptions, Apple Music and the App Store, but did not provide details on the performance of TV +, the new video streaming service. The company recently extended the free trials of TV + for several months.
Apple launched four major new products in the Wearables, Home and Accessories segment this quarter: the Apple Watch Series 6, Apple Watch SE, the HomePod mini speaker and AirPods Max headphones. Those devices gave Apple its strongest quarter to date for that segment with sales of $ 12.97 billion. Analysts estimate $ 11.84 billion.
Apple saw significant growth in all major regions, including Greater China, where sales rose from $ 13.6 billion a year ago to $ 21.3 billion. The company reported sales of $ 46.3 billion in the US region, an increase of about $ 5 billion from the same period last year.
(Updates with CEO, CFO comments on more expensive iPhones in ninth paragraph.)