Apple’s Turbulence due to the “Coronavirus”

Apple has overcome the weakness in the iPhone business and closed the past Christmas season with record numbers. Quarterly earnings reached $ 22.2 billion ($ 20.12 billion) after just under $ 20 billion a year earlier. Revenue increased nine percent year over year to $ 91.8 billion.

The iPhone, by far the most important product of the group, saw a significant increase in sales of 7.6 percent to just under $ 56 billion after a few quarters of decline. Apple no longer provides information on the number of units sold. Last fall, some of the more expensive new models came onto the market.

In the current quarter, Apple is preparing for turbulence in its Chinese supply chain due to the new corona virus. Some companies are located in the particularly affected region around the city of Wuhan, CEO Tim Cook said in a conference call on Tuesday. But there are alternative sources for their products. The further development of other suppliers is unclear, for which the usual time-out for the Chinese New Year was partly extended by a week.

The company closed an Apple store in China and reduced employee travel to the country, Cook said. Some Chinese retail partners have also closed stores or shortened opening hours, and fewer buyers would come to stores.

The uncertainty surrounding the corona virus is the reason why an unusually wide range of $ 63 billion to $ 67 billion was selected for the sales forecast for the current quarter, said Apple CFO Luca Maestri. In any case, this is a significant plus compared to the $ 58 billion in sales in the same quarter of the previous year.

A key pillar of the successful Christmas quarter was the small portable devices such as the Apple Watch computer watch and the AirPods earphones, as well as the subscription business with services.

The wearables division’s business soared nearly 37 percent to a good $ 10 billion. It surpassed Mac computer sales for the first time, dropping to $ 7.1 billion. In addition to a new generation of watches, Apple also released an improved – and more expensive – pro version of the AirPods during the Christmas season.

Services like Apple Music or iCloud storage saw an increase of around 17 percent to $ 12.7 billion. Apple now has 480 million subscription customers. The goal of 500 million customers will now be achieved in the current quarter, said Maestri. By the end of the year, Apple now wants to have 600 million subscription customers. The iPad tablet business, meanwhile, shrank by 11 percent to just under $ 6 billion.

In the 2018 Christmas season, Apple suffered an unusual setback with a decline in sales. The group primarily blamed a slowdown in the Chinese business. Now, revenue in China has increased from $ 13.2 billion to $ 13.6 billion

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Apple's Turbulence due to the Coronavirus - /10

Summary

Apple has overcome the weakness in the iPhone business and closed the past Christmas season with record numbers. Quarterly earnings reached $ 22.2 billion ($ 20.12 billion) after just under $ 20 billion a year earlier. Revenue increased nine percent year over year to $ 91.8 billion.

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