Apple delivers best quarter from gains in iPhone sales

San Francisco

APPLE on Tuesday posted record results for the final three months of last year, delivered by gains in iPhone sales even as the company transitions to digital services and wearables.

Striking a sombre tone on an earnings call, chief executive Tim Cook said the company is tracking the deadly viral outbreak hitting China, where Apple has customers, partners, suppliers and employees.

Apple gave a wider-than -usual revenue forecast range of US$63 billion to US$67 billion for this quarter, citing uncertainty regarding how the outbreak will affect its business.

"We're donating to groups that are working to contain the outbreak; we're also working closely with our team and our partners, and we limited travel to business-critical situations from last week," Mr Cook said.

Some of Apple's suppliers are based in the area near Wuhan, the Chinese city at the centre of the outbreak. The CEO said the company is working on "mitigation plans" to make up for production loss with alternate sources.

"With respect to supply sources that are outside the Wuhan area, the impact is less clear," he said.

Apple said it had closed one of its Wuhan stores and added that some retail partners have shuttered their shops or cut hours of business.

"We're taking additional precautions and frequently deep-cleaning our stores as well as conducting temperature checks for employees," Mr Cook said.

"While our sales within the Wuhan area itself are small, retail traffic has also been impacted outside of this area across the country in the last few days," he added.

The Sars-like virus has killed more than 130 people in China and the number of confirmed cases across the country stands at nearly 6,000.

Net profit hit an all-time high of US$22 billion on record quarterly revenue of US$91.8 billion, the tech giant said of the results which were far stronger than most analyst estimates.

Revenue was "fuelled by demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for services and wearables," Mr Cook said.

Apple's net income in the holiday quarter ending Dec 28 set a new record for the company, said chief financial officer Luca Maestri.

The results come with Apple seeking to shift its revenue mix amid a slumping smartphone market and growing competition in the segment, and as it relies more on services such as music, streaming television and other digital content.

"With each Apple product that a customer buys, I think they get tighter into the ecosystem," Cook said.

Apple stopped reporting unit sales for the iPhone, which has been the main cash-generator for the company in recent years, but revenue for its smartphone sales was up nearly eight per cent in the quarter at US$55.9 billion.

Services revenue rose 17 per cent from a year ago to US$12.7 billion, driven by the launch of its Apple TV+ service and its new credit card.

Paid subscriptions to Apple services hit 480 million in December, so the company expects to eclipse its 500 million target in the months ahead; it has its eye on hitting 600 million by the end of this year.

The Apple TV+ on-demand streaming service launched in more than 100 countries at US$4.99 a month, at a price lower than those offered by rivals such as Netflix.

Shares in Apple were up slightly in after-market trades that followed release of the fiscal first-quarter earnings, extending a remarkable streak for the company which a year ago had been dogged by concerns of a slowdown in smartphone sales.

Apple shares have doubled from a year ago - lifting its valuation to more than US$1.3 trillion - as the company has expanded its services with television streaming, digital payments and wearable tech such as its AirPods and an updated Apple Watch.

Analyst Yoram Wurmser of the research firm eMarketer welcomed "a strong quarter for Apple, primarily driven by strong sales of the iPhone 11 lineup".

Apple bought back US$20 billion in shares during the quarter and paid some US$3.5 billion in dividends, in its mission to be "net cash neutral" sometime in the future, said Mr Maestri. AFP