US Tech titan Apple posted record sales of $111.4 billion during the last quarter of 2020, its most profitable quarter. A combination of pandemic-fueled demand for laptops and tablets and a huge demand for the iPhone 12 helped set record revenues. In fact, last quarter was the first time that Apple topped $100 billion in quarterly revenue. CEO Tim Cook said that Apple could not be more optimistic. The Cupertino-based company’s share rose 84% over the past year until Wednesday’s earnings report. Profits gained by 29% to $28.76 billion for the quarter.
As a result, revenue went up 21% year-over-year and earnings per share rose 35% since this quarter last year. Despite the impressive results, Apple stock went down 1% following the earnings call.
Apple Posted Record Sales During the Holiday Quarter
The holiday quarter remained Apple’s most closely watched period, as it accounts for 30% of its annual sales. 2020 did not disappoint, as even the disruption caused by coronavirus did not dampen iPhone sales. Analysts earlier predicted that the iPhone 12 launch would generate a purchasing frenzy similar to the first large-screen iPhone launch in 2014. All in all, Apple posted record sales on the way to blowing away revenue expectations. Instead of the expected $103.12 billion, Apple made out with $111.4 billion. The company reported earnings per share are 26 cents higher than predicted at $1.68. Service revenue exceeded targets of $14.89 billion as it posted $15.76 billion, while iPhone revenue came out $5 billion higher than expected, posting $65.68 billion versus analyst expectations of $60.33 billion.
True enough, supply disruptions delayed the release of the anticipated gadget. Apple moved the launch from its typical September schedule to October. Even deliveries took longer, as some versions arrived at customers’ eager hands only by November. This cut down the weeks Apple had to generate sales before Christmas. It didn’t matter, as iPhone revenue rose 17% to $65.6 billion in the holiday quarter. In China alone, iPhone sales rose 57% as buyers took advantage of its 5G capability. China already operates a widespread 5G network. Meanwhile, sales increased for its lineup of Mac desktops by 21%, while iPad sales grew by 41%. MacBook sales also increased as it featured Apple’s own proprietary chip, the M1.
More Profitable Phones
The iPhone 12 alone features four models. The mini version costs $699, which is the same price as the largest size of its predecessor, the iPhone 11. The regularly sized iPhone 12 costs $799 while the bigger and more feature-laden iPhone 12 Max models start at $1,099. The US average retail price for an iPhone rose from $809 to $873. Since 2015, the company actively boosts average selling prices to generate more profit as unit sales have continued to decrease.
During the earnings call, Apple did not give its revenue guidance for the current fiscal quarter. However, CFO Luca Maestri indicated that given Apple’s trend, revenue should be better than last year. The company posted $58.3 billion in revenue during the second quarter last year. Cook did say that iPhone 12 supplies should be fine for the period, although iPad stocks have yet to stabilize.
Not Everybody Happy for Apple
Not everybody came out happy as Apple posted record sales. Facebook CEO Mark Zuckerberg sharply criticized the technology giant, accusing Apple of gaming the system to benefit them at the expense of other tech companies. “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,” Zuckerberg noted.
During their own conference call with analysts, Zuckerberg said that Apple is fast becoming one of Facebook’s “biggest competitors” because of its messaging dominance on the iPhone. Apple will soon require apps to request user permission before collecting data and let ads follow them around on the internet. Facebook is very vocal about these requirements, saying that applying these rules can hurt the app’s advertising revenue. More importantly, the move threatens Facebook’s own advertising revenue. Zuckerberg thinks Apple’s motives aren’t about privacy. “Apple may say that they are doing this to help people, but the moves clearly track their competitive interests,” Zuckerberg said. Meanwhile, Apple insists on giving users the power to control their data and dismisses advertisers and companies like Facebook’s fears that the anti-tracking feature will hurt the online ad industry.
Watch the Yahoo Finance news video reporting that Apple earnings top Q4 expectations but sales drop in China:
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