Apple (Apple) announced 1Q 2021 earnings on Wednesday, with revenue and profit both exceeding Wall Street’s expectations as the new 5G iPhone drove cell phone revenue to a record high last quarter and sparked a 57% increase in China sales.
Apple shares fell 3.4 percent in after-hours trading. The stock surged 7.6 percent in the week before the earnings report, the biggest one-week gain since at least 2011.
Apple’s iphone 12 series shipped later than in previous years, but still spurred a wave of switchers, especially in China. Driven by consumer demand for remote work and study, sales of each product saw double-digit growth, with iPad revenue up more than 40 percent.
For the quarter ended December 26, Apple’s revenue jumped 21% from a year ago to $111.4 billion, crossing the $100 billion symbolic barrier for the first Time and beating market expectations of $103.27 billion. Net income was $28.76 billion, or $1.68 per share, up from $22.24 billion, or $1.25 per share, a year ago. Analysts were expecting a surplus of $1.41 per share.
Although the latest iPhone series was not available for the entire quarter, it still drove smartphone sales to a record $65.6 billion, up from $55.96 billion a year ago and analysts’ estimates of $59.8 billion. Apple’s original single-quarter high was $61.58 billion in the first quarter of fiscal 2018.
Apple Chief Executive Officer Tim Cook said last quarter’s results could have been better if not for the Epidemic and the lockdown that forced Apple to temporarily close locations around the world. He also said Apple’s iPhone installations are now over 1 billion, up from 900 million previously reported in 2019. Active installs of all Apple products stood at 1.65 billion.
While the epidemic has messed up Apple’s product development cycle making 5G devices late to launch, Cook and other executives were optimistic about the phone’s big sales last October citing initial sales data in China. Their prediction was accurate, with China’s Q1 revenue jumping 57 percent to $21.31 billion, compared to $13.58 billion a year ago.
Mac sales rose 21 percent annually to $8.68 billion, roughly in line with market expectations of $8.69 billion. Apple launched its first notebooks and desktops with its own processor chip last November, ending a nearly 15-year partnership with Intel.
iPad sales rose 41 percent year-on-year to $8.44 billion, above analysts’ expectations of $7.46 billion.
Cook said the Mac, iPad and iPhone 12 Pro were all experiencing “supply constraint” problems. He said “semiconductors are tight,” but other parts of the supply chain are also causing tightness.
The company’s services business, which includes the new Apple One service that combines TV, Music and cloud storage services, saw revenue rise 24 percent to $15.76 billion, up from $14.8 billion in analyst estimates.
Analysts tracked by FactSet believe revenue will be $74.05 billion for the quarter ending in March, with earnings of 91 cents per share.
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