Apple reported weaker iPhone sales than Wall Street expected for its most recent quarter, but CEO Tim Cook said demand was strong in recent weeks for new models.
Overall sales at Apple rose 1% to $64.7 billion for the quarter ended September 30, a little better than analysts forecast. But that included weaker-than-expected iPhone sales of just $26.4 billion, down 21% from last year. Booming sales of laptops and iPads for stuck-at-home workers and students made up the difference. Profits of 73 cents per share were 3 cents better than the average analyst forecast.
Apple’s stock price, which has already risen 57% so far this year, lost 5% in after-market trading.
In a call with analysts, Cook and Apple CFO Luca Maestri tried to explain that the iPhone shortfall was only a temporary blip. Because COVID-19 forced some factories in Asia to shut down earlier this year, Apple’s new line of iPhones didn’t go on sale until mid-October, missing the usual mid-September debut.
“We’re very bullish on this cycle,” Cook said, noting that the new iPhone 12 family is the first from Apple with 5G capability and many wireless carriers are making generous trade-in offers. “It is the strongest line up we’ve ever had by far…we are off to a great start.”
The new $800 iPhone 12 and $1,000 iPhone 12 Pro went on sale on October 23. The $700 iPhone 12 Mini and $1,100 iPhone Pro Max will be available for pre-order on November 6, with sales starting on November 13.
“We just started shipping iPhone 12 and iPhone 12 Pro and we’re off to a great start,” CFO Luca Maestri told analysts on the call. “Given the tremendously positive response, we expect iPhone (sales) to grow during the December quarter (compared to a year ago).”
Apple sold $56 billion of iPhones in the holiday quarter last year.
But Apple did not give specific guidance about how much total revenue it might bring in for the holiday quarter. The company used to offer analysts a revenue range but stopped in the middle of this year, citing the complications and unpredictability of the pandemic.
Cook was also asked about the possible impact on Apple from the Google antitrust case filed by the Justice Department last week. The government accused Google of using illegal means to expand its search ad business by paying Apple to be exclusive search provider on the iPhone. The payments constitute 15% to 20% of Apple’s annual profits, according to the lawsuit.
Cook pointed to Apple’s growing revenue from a variety of other services, like Apple Music and iPhone app sales, which in theory could offset some or all of the revenue Google currently provides.
“There’s a lot of room there and potential there,” Cook said. “I have no idea how the DOJ suit will go but it’s a long way from a conclusion.”