By Tim Higgins
Apple Inc. finished 2020 with its most profitable quarter ever,
fueled by an uptick in higher-end iPhone sales and a
pandemic-induced surge in demand for its laptops and tablets.
All together, the Cupertino, Calif., company generated $111.4
billion in quarterly sales, an all-time high and the first time it
has topped $100 billion in quarterly revenue.
"We could not be more optimistic," Apple Chief Executive Tim
Cook said in an interview about the company's product lineup.
The results arrived Wednesday during the biggest week for
corporate earnings this quarter as Apple, Tesla Inc. and Facebook
Inc. sought to appease investor concerns over whether their rapid
growth will continue.
Tesla posted its sixth-straight quarter of profits but fell in
after-market trading. The company offered a full-year delivery
forecast that appeared less robust than analysts had expected.
Facebook reported record net income but also warned that
uncertainty from regulatory probes and ad-targeting limits could
create business headwinds.
Apple's increasing might came under sharp criticism from
Facebook Chief Executive Mark Zuckerberg on Wednesday, who went so
far as to point to Apple as a threat to his business, saying the
iPhone maker was increasingly a rival and taking steps that could
benefit its digital ecosystem over rivals.
"Apple has every incentive to use their dominant platform
position to interfere with how our apps and other apps work, which
they regularly do to preference their own," he said. Apple didn't
immediately respond to a request for comment.
Apple shares rose 84% over the past year through Wednesday's
close on investor enthusiasm around its latest iPhone and
heightened spending on its products from consumers working, going
to school and seeking entertainment while stuck at home.
Profit rose 29% to $28.76 billion in the three months ended in
December, its fiscal first quarter.
Apple didn't provide specific revenue guidance for the current
quarter, but Chief Financial Officer Luca Maestri provided a rough
indication of how it was trending. He said revenue should be better
than last year, when the company posted $58.3 billion in revenue
for its second fiscal quarter.
Following the company's results and conference call, Apple
shares slid 3% to $137.77 in after-hours trading.
The holiday quarter is always a closely watched period for
Apple, accounting for about 30% of its annual sales. This time
around, however, it took on greater emphasis with the arrival of
the iPhone 12 that some analysts and investors were betting would
trigger a record boom similar to when the first large-screen iPhone
was introduced in 2014. That bet, however, was thrown into question
with the spread of the coronavirus last year.
The initial outbreak in China delayed the production of the
flagship phone and pushed back its launch to October from its
typical September debut. Some versions of the new phone didn't
start shipping to customers until November, cutting down the number
of weeks Apple typically has in the period to capture sales ahead
iPhone revenue rose 17% to $65.6 billion in the December
quarter. The latest iPhone has the capability of accessing the
next-generation cellular network, dubbed 5G, which promises faster
internet speeds. The new iPhone also helped sales rise 57% in
China, which has a more developed 5G network.
In the interview, Mr. Cook said the iPhone 12 should be in
balance this quarter, while he doesn't expect iPad issues to be
resolved this quarter.
For the iPhone 12, Apple introduced four versions of the lineup,
including a new mini version with a starting price of $699, which
was the same cost as the larger iPhone 11 a year earlier. The
comparably sized iPhone 12 costs about $100 more than its
predecessor, and the biggest and most expensive iPhone 12 Max
begins at $1,099.
In the U.S., the average retail price of the iPhone rose to $873
from $809 a year ago, driven by buyers gravitating to the more
expensive versions, according to a survey of customers by Consumer
Intelligence Research Partners LLC. The improvements in pricing
follow a trend under Mr. Cook to boost the average selling price of
iPhones, squeezing more profit out of the devices as unit sales
have fallen from a peak of 231 million in fiscal 2015.
Elsewhere, Apple said sales increased 21% for the Mac lineup and
41% for iPads. Laptop sales were helped by the arrival of the
company's new in-house chip, dubbed, the M1, according to Mr.
Another closely watched metric, Apple's service business, which
has taken on increased importance in recent years, rose 24%.
Cellular carriers have used the arrival of a 5G iPhone to try to
poach new customers. But it is unclear whether that is happening.
The lack of killer new programs to take advantage of that 5G speed
and a limited network raised questions among some analysts about
the true interest of the feature as a selling point for the pricey
Of the iPhone buyers in Consumer Intelligence's survey, only
seven mentioned 5G. Most said they were motivated in buying the new
iPhone because of problems with their previous phone or because of
general motivations around upgrading.
(Dow Jones & Co., publisher of The Wall Street Journal, has
a commercial agreement to supply news through Apple services.)
Write to Tim Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
January 27, 2021 20:12 ET (01:12 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.