Berkeley (United States): Apple’s profit dipped slightly while revenues rose in the January-March quarter. The figures reflected early fallout from coronavirus pandemic that shut down Apple factories. The virus then forced hundreds of Apple retail stores to close.
Recession time even for Apple
The results released Thursday give the first sign of how one of the world’s best-known companies is faring. This is when the US economy is plunging into its first recession in more than a decade.
Apple CEO Tim Cook said the current downturn could be harder than what the company experienced during the 2007-2009 period. At that time consumers were still captivated by the then-new iPhone.
“The current conditions represent the most challenging global environment in which we’ve ever operated our business,” Cook said.
Apple’s revenue increased by one per cent from the same time last year to $58.3 billion during the company’s fiscal second quarter.
iPhone sales hit hard
To no one’s surprise, the iPhone was the company’s hardest hit segment. Sales for the device fell seven per cent % from the same time last year. Apple’s profits fell to $11.2 billion, a two per cent decline from last year. The company told investors Thursday that iPhone sales will deteriorate even further during the April-June quarter.
The numbers were far better than analysts, who were braced for a six per cent revenue decline, had feared. “Investors were expecting a Friday the 13th like quarter,” Wedbush Securities analyst Daniel Ives said.
Product manufacturing hampered
Those worries appeared well founded. That’s because Apple’s supply chain was already constrained by the pandemic’s outbreak in China. It forced the company to temporarily close factories in China. Most of Apple’s iPhones and other products are manufactured in China.
The factories in China are open and operating at normal levels again. However, the closures are expected to delay the fall release of Apple’s next iPhone models by at least a month. Apple’s stores still remain closed in many places as part of efforts to limit the spread of COVID-19.
The numbers offered a sobering reminder of how much the world has changed in just three months. In late January, Apple’s stock price had just hit its all-time high $327.81. The management had said its revenue for the first three months of the year might reach as high as $67 billion.
Now, everything remains so uncertain that Apple isn’t making any forecasts for the coming quarter. It is however, clear the next quarterly report will be worse than this one.
Overall, Apple remains in an enviable position. It is bolstered by a strong brand, $94 billion in cash and a loyal customer base.
To help prop up the stock during the downturn, Apple plans to spend $90 billion buying back its own shares. It also announced a six per cent increase in its quarterly dividend to 82 cents per share.