Apple Revenue Rises But China’s Virus Poses Uncertainties

With its latest iPhone, AirPods wireless earbuds and apps, Apple’s revenue rose 9 percent in the December quarter, to $91.82 billion. In response, the company’s shares rose 1.5 percent in after-hours trading. Apple’s flagship smartphone, which accounts for more than half of its revenue, rose 8 percent to $55.96 billion. China’s coronavirus outbreak poses uncertainty, since most of the tech giant’s products are manufactured there. Chief executive Tim Cook said Apple is limiting travel to China and reducing store operating hours in the country.

The Wall Street Journal reports Cook also stated that, “Apple has alternatives to its suppliers in Wuhan, the region at the center of the outbreak … [and that] factories outside the region have pushed back plans to reopen after the Lunar New Year to Feb. 10 from the end of January.”

In addition to manufacturing Apple devices, China accounts for “nearly a fifth” of Apple’s sales. Apple’s numbers represent a comeback from last year’s failure “to report a quarterly revenue record for the first time since the iPhone’s 2007 release,” due to “an iPhone sales slump and an economic downturn in China.”

New services and accessories for smartphone owners boosted Apple’s numbers, as well as “the addition of a credit card and video-subscription service [that] helped increase sales of services 17 percent in the latest quarter.” The debut “of the $250 AirPods Pro … helped fuel a 37 percent surge in the company’s wearables business.” That success “energized investors and helped the company’s stock record one of the biggest one-year rallies in history,” with share prices “more than doubled from last year’s low, adding more than $725 billion to its value.”

“This is continued evidence that services can transform the company,” said Adams Funds chief executive Mark Stoeckle. “Tim Cook has brought out products that have not only added to revenue and earnings but done so within an ecosystem where that cash cow — the iPhone business — has been the beneficiary.”

Apple plans to release its lower priced $399 iPhone SE later this year as well as its first 5G iPhones in the fall. Apple did not, however, provide “subscription numbers for its Apple TV+ video service … launched in November with a price of $4.99 a month.” Cook stated that, “the number of active Apple devices world-wide rose to 1.5 billion from 1.4 billion a year ago,” a 7 percent increase represent[ing] a deceleration in growth from prior years,” but proof that “Apple is continuing to increase its customer base as it aims to sell more services.”

The New York Times reports that, “early market estimates suggest the [Apple TV+] service has not been a big draw for new paying subscribers over the first several months, in part because Apple is giving a free year subscription to the service to anyone who buys a new iPhone, iPad, Apple TV or Mac computer.”