By Tripp Mickle 

Apple Inc. posted record revenue and a return to profit growth in its latest quarter behind strong sales of iPhones, apps and its AirPod wireless earbuds.

The tech giant reported revenue rose in the December quarter to $91.82 billion from $84.31 billion, driven by blossoming sales of devices and services connected to the iPhone such as smartwatches and streaming-TV subscriptions. Sales of iPhones, which account for more than half of its revenue, increased to $55.96 billion from $51.98 billion.

Net income grew to $22.24 billion from $19.97 billion, its first quarterly profit increase in more than a year and a record. The company said per-share earnings in the latest quarter were $4.99. Analysts surveyed by FactSet expected earnings of $4.54 a share.

Apple said it expects revenue in the current period between $63 billion and $67 billion. Analysts projected revenue of $62.41 billion, according to FactSet.

Shares of Apple, which have more than doubled over the past year, rose 1% to $321.10 in after-hours trading.

The results marked a return to form for Apple, which for the first time last year failed to report a quarterly revenue record since the iPhone's 2007 release. A year ago, it slashed its guidance for the first time in more than 15 years. An iPhone sales slump and an economic downturn in China led to its first decline in fiscal year revenue since 2016.

The company sought to snap out of a slowdown in its smartphone business by introducing new services and accessories that would appeal to owners of the 900 million iPhones world-wide.

The addition of a credit card and video-subscription service helped increase sales of services 17% in the latest quarter, the company said. Meanwhile, the introduction of the $250 AirPods Pro with noise cancellation helped fuel a 37% surge in the company's wearables business, which also includes smartwatches and iPods.

The growth in both those businesses has energized investors and helped the company's stock to one of the biggest one-year rallies in history. Apple has added more than $725 billion to its value, well above the total market value of Facebook Inc.

"This is continued evidence that services can transform the company," said Mark Stoeckle, chief executive of Adams Funds, a Baltimore-based investment firm with $2.5 billion under management that counts Apple among its largest holdings.

"[Apple CEO] 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," Mr. Stoeckle said.

The iPhone still accounts for the majority of Apple's revenue, about 61% in the latest quarter. Additional cameras on the three models it released in September and a $50 price cut on the base model helped the iPhone business return to growth.

To give a potential jolt to its smartphone business, Apple plans to release a low-priced iPhone this year that is expected to be an update to the $399 SE model it first released in 2016. It also is expected to release its first 5G iPhones in the fall, offering a new generation of wireless speed that has Wall Street analysts forecasting a return to iPhone shipment growth in 2021.

A recent viral outbreak in China, Apple's second-most important market after the U.S., has created a new challenge for the company. It counts on China for nearly a fifth of its sales and relies on its workforce to assemble most of the iPhones, iPads and Macs it sells around the world. The government's effort to contain the coronavirus by shutting down businesses threatens to disrupt both Apple's sales and its supply chain.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

 

(END) Dow Jones Newswires

January 28, 2020 17:14 ET (22:14 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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