Apple reports record results but notes the Wuhan virus

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

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

“Our thoughts are with all of those that are affected across the region,” Cook said.

Apple gave a wider than usual revenue forecast range of $63 billion to $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 very closely with our team and our partners and we have limited travel to business-critical

Some of Apple’s suppliers are based in the area near Wuhan, the Chinese city at the center of the outbreak, and Cook said that 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,” 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 $22 billion on record quarterly revenue of $91.8 billion, the tech giant said of the results which were far stronger than most analyst estimates.

Revenue was “fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for services and wearables,” Cook said.

Apple’s net income in the holiday quarter ending December 28 set a new record for the California-based company, according to 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 percent in the quarter at $55.9 billion.

Services revenue rose 17 percent from a year ago to $12.7 billion,.

AFP