Apple sees revenue growth accelerating after setting record for iPhone sales, helped by China strength

Apple Inc on Wednesday reported holiday quarter sales and profits that beat Wall Street expectations, as new 5G iPhones helped push handset revenue to a record and sparked a 57 per cent rise in China sales.

Apple shipped its iPhone 12 line-up several weeks later than usual, but an expanded number of models and new look tapped pent up demand for upgrades, especially in China. The company also posted strong sales of its Mac laptops and iPads in the quarter, driven by consumers working, learning and playing from home during the pandemic.

Apple’s revenue for the quarter ended Dec. 26 rose 21 per cent to US$111.44 billion. Earnings per share rose to US$1.68 from US$1.25, beating Wall Street targets, according to IBES data from Refinitiv. Sales of iPhones were US$65.60 billion and beat a record set three years ago.

Chief Financial Officer Luca Maestri told investors that revenue growth was likely to accelerate on a year-over-year basis in the current fiscal second quarter and that gross margins were likely to be similar to the fiscal first quarter’s rate of 39.7 per cent. He also said the company’s services segment revenue faced a tough comparison to the year before, when the pandemic lifted sales, and that year-over-year growth in the company’s wearables segment would slow.

Shares of Apple were down 2.6 per cent at US$138.33 in after-hours trade following the report but have risen nearly 12 per cent since Jan. 15. Apple shares rose 85 per cent over the previous year, versus 46 per cent for the Nasdaq 100, of which it is a component.

“Their challenge is keeping up the success to justify the now-premium valuation,” Trip Miller, managing partner at Apple investor Gullane Capital Partners.