iPhone sales fell 20% ahead of iPhone 12 launch, but Apple isn’t worried

iPhone sales fell 20% ahead of iPhone 12 launch, but Apple isn’t worried

Apple iPhone logo 2

After the iPhone 12 comes out, the next question is how well it works.

Patrick Holland / CNET

Apple’s iPhone sales fell 20% as consumers waited for their iPhone 12 to be released, given the continued proliferation of the iPhone 12 Coronavirus A pandemic that has changed lives, disrupted business and slowed production around the world. But Apple executives said they weren’t particularly concerned about it.

This is mainly thanks to Apple Delay in unlocking iPhone 12This led to a coincidence in financial reporting that made the company’s sales appear artificially lower than usual. Last year’s number included about a week of newly announced iPhone sales. This year’s number didn’t. As a result, Apple had $ 26.4 billion in revenue from older iPhone sales, more than a fifth less than a year ago.

Rather than sticking to these numbers, Apple executives painted a rosy picture of the holiday shopping season and expected sales of their iPads, Macs, Apple Watches, and other products to grow by at least 10%. The company was also optimistic about iPhone sales, which were also forecast to increase.

One of the main reasons, said Apple CEO Tim Cook, is the new wireless technology.

“With 5G we have a chance every ten years,” he told analysts in a conference call on Thursday and spoke about the next-generation cellular service promises faster and more reliable downloads. “There’s a lot of excitement about 5G.”

To push that point, Apple said the company’s sales, apart from the iPhone, were up 25% year over year despite delivery bottlenecks amid the ongoing coronavirus crisis.

“In April, I said we were in the toughest environment Apple has ever been in as a company. That atmosphere of uncertainty – determination, difficult calls with limited information – determined not only Apple’s year, but each of ours Life, “said Cook. “When we first looked at COVID-19, I said that for a company whose business is innovation there are worse things than having to do almost everything in completely new ways on a regular basis.”

Overall, Apple achieved a profit of 12.7 billion US dollars, which is a decrease of around 7% from the previous year. That translates into earnings of 73 cents per share for total revenue of $ 64.7 billion, up slightly from the $ 64 billion reported the previous year. According to surveys by Yahoo Finance, it was also enough to beat average analyst estimates, which made earnings of 70 cents per share on sales of $ 63.7 billion.

Investors reacted, pushing Apple stock down more than 5% to $ 109.20 after closing regular trading and rising 3.7% to $ 115.32 per share. It has increased by about half this year so far.

Challenging year

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Apple is still faced with a multitude of competitors whose usually lower prices make them particularly attractive in times of economic uncertainty.

Angela Lang / CNET

Apple’s recent financial reports are just the latest indication of how the coronavirus pandemic has impacted the global economy. In the US, total smartphone sales rose slightly over the same period after falling double digits earlier this year, according to Counterpoint Research. Apple generates most of its revenue from the sale of its iPhone product family.

By and large, the US is now preparing for next week’s presidential election, in which Americans will choose their leader to deal with the coronavirus and the economic problems that have arisen since it spread. US GDP, a measure of the American economy, has fluctuated widely in recent months, seeing its worst quarterly decline earlier this year, before rising more than 33% between July and September. Overall, it fell 3.5% from the same point in time a year before COVID-19. Analysts warn that further coronavirus-related lockdowns could continue to weigh on the economy.

As the US grapples with increasing coronavirus cases across the country, the US government has done so decided not to undertake any further incentive efforts after a series of bills earlier this year. This has created a bad mood on Wall Street, where the Dow Jones Industrial Average has fallen about 6% this week.

This begs questions about how enthusiastic people will be with their Christmas shopping this year, and whether they are ready to pick one of Apple’s iPhone 12 models, which starts at $ 799. The iPhone 12 Pro max and iPhone 12 Mini should start at the beginning of next month.

There is also uncertainty as to whether Apple can produce enough supplies on its own to keep up with potential demand. Despite being considered one of the best supply chain companies in the world, Apple warned earlier this year that iPhone sales would slow due to manufacturing issues in China. The company also found “delivery bottlenecks” in its meeting with analysts on Thursday.

Still huge

While iPhone sales were mangled by the delayed launch of the iPhone 12, Apple was bullish on other businesses. Mac sales rose nearly 30% to $ 9 billion and iPad sales rose nearly 46% to $ 6.8 billion. The company’s wearables, home, and accessories business, which includes the Apple Watch, AirPods, and HomePod, grew 20% to nearly $ 7.9 billion. The service businesses, including Apple Music and Apple TV Plus, grew more than 16%. This is the slowest growth among the company’s non-iPhone businesses.

Americans continue to be Apple’s largest market, climbing more than 4% to nearly $ 30.7 billion. The weakest market was China, with a 29% drop in sales that Apple attributed to the iPhone’s lag. “Given the first data points we’re seeing on the iPhone 12 and iPhone 12 Pro,” said Cook, “I would tell you that we are confident that we will grow in China this quarter.”

“We are very bullish,” he added.


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Bet on 5G

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Apple did a big deal with 5G support when it announced the iPhone 12.

Apple

Despite the global economic uncertainty, Apple watchers say the iPhone 12 could be one of the company’s most successful products in years.

Analysts routinely discuss Apple’s introduction of updated 5G wireless capabilities that promise faster, more reliable download speeds. This will usher in a “super cycle” of shopping that has not been seen since 2014. Back then, the then-new iPhone 6 helped Apple’s sales sales jump to 74.5 million units, up more than 45% from 51 million units sold in the same period in 2013. Apple’s iPhone Christmas sales have changed little since then.

With no details or official “estimates”, Apple executives repeatedly told analysts that they expected the company to perform well during the holiday season. This includes higher iPhone sales and double-digit growth in the other products and services. “We’re off to a great start,” said Luca Maestri, Apple’s CFO, during Thursday’s conference call with analysts.

The Christmas shopping season will also include the company’s launch new Apple One service, which offers some of the company’s services like music and new fitness subscriptions, in a discounted package starting at $ 15 per month. Cook said Apple One will be made available this Fridayand his fitness service will arrive before the end of the year.

Aside from the pandemic in general, one of Apple’s biggest challenges has been building enough iPhones for people who want to buy them.

“How long we will cut supply is difficult to predict,” said Cook. “We’re working really, really hard to fix this as soon as possible, but at this point. I can’t tell when we will be gone.”

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