Apple (AAPL) released its first-quarter earnings after the bell on Thursday, outperforming analysts’ predictions on both revenue and profit, mainly due to better than expected iPhone sales. However, worrying signs about its business in China had a dampening effect on investor confidence as the market accounts for about one-fifth of Apple’s sales. In this quarter, Apple reported earnings per share of $2.18 on revenue of $119.6 billion, exceeding analysts’ expectations of $2.11 per share on revenue of $117.9 billion. The company’s iPhone sales stood at $69.7 billion, beating the anticipated $68.6 billion. On the downside, sales in China were lower than expected at $20.8 billion, while Wall Street had projected sales of $23.5 billion. Consequently, Apple’s stock fell over 2% in premarket trading on Friday. The company is grappling with a sluggish Chinese economy as well as heightened competition from Huawei, impacting its sales in the region. Nonetheless, strong performance in North America and Europe helped offset the impact.
Apple CEO Tim Cook stated, “Today Apple is reporting revenue growth for the December quarter fueled by iPhone sales, and an all-time revenue record in Services. We are pleased to announce that our installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments.”
The company’s Mac revenue came in at $7.8 billion in the first quarter, falling short of analysts’ projections of $7.9 billion. Likewise, iPad revenue also missed at $7 billion, below the expected $7.1 billion. This marks a significant decline from the $9.4 billion the iPad business generated last year. According to Bloomberg’s Mark Gurman, Apple is set to unveil updated iPads and Macs in March, possibly boosting sales for both business segments in the upcoming year.
Wearables, home, and accessories generated $12 billion, meeting estimates. Apple has been entangled in an ongoing patent dispute with medical device maker Masimo, which led to the temporary removal of the device from store shelves. Although the blood oxygen sensor component triggering the conflict has been removed from its Series 9 and Ultra 2 watches, the impact on sales remains unclear.
Meanwhile, Apple’s Services segment recorded $23.1 billion, slightly below the anticipated $23.4 billion. As the company prepares to launch its Vision Pro AR/VR headset, with sales commencing on Feb. 2 at $3,499, it is expected to face limitations due to its high price. While exact device sales figures are not disclosed by Apple, the company’s commentary on the initial response to Vision Pro preorders and developer community engagement will be closely watched. The success of Vision Pro hinges on app development by the developer community.
Daniel Howley serves as the tech editor at Yahoo Finance, with coverage of the tech industry since 2011. Follow him on Twitter @DanielHowley.
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