RESEARCH TRIANGLE PARK – Demand for the iPhone drove Apple’s profits to more than double in the January-March period as the tech giant continued to capitalize on smartphone addiction.
“This quarter reflects both the enduring ways our products have helped our users meet this moment in their own lives, as well as the optimism consumers seem to feel about better days ahead for all of us,” said Tim Cook, Apple’s CEO, in a statement. “Apple is in a period of sweeping innovation across our product lineup, and we’re keeping focus on how we can help our teams and the communities where we work emerge from this pandemic into a better world. That certainly begins with products like the all-new iMac and iPad Pro, but it extends to efforts like the 8 gigawatts of new clean energy we’ll help bring onto the grid and our $430 billion investment in the United States over the next 5 years.”
On Monday, Apple announced a national expansion plan that includes a $1 billion campus in RTP and some 3,000 jobs.
Profits the most recent quarter came to $23.6 billion, or $1.40 per share, while revenue climbed 54% to $89.6 billion in the fiscal second quarter, the company said Wednesday. Analysts polled by FactSet expected 99 cents per share on $77.1 billion in sales.
The iPhone, Apple’s crown jewel, hadn’t been selling quite as well in the past few years as people held on to their existing models for longer. But the release of four iPhone 12 models last fall has unleashed purchases, and iPhone sales rose 66% to $47.9 billion on top of a holiday-season quarter when iPhone sales jumped 17%.
Some analysts believe the popularity of the iPhone 12 could lead to the device’s biggest sales year since 2014, when the iPhone 6 came out. It was a big hit because Apple enlarged the device’s screen.
The iPhone 12 is the first model that can connect to 5G wireless networks that promise higher speeds but are still being built out. Apple is trying to goose sales even more during the current quarter by with an iPhone 12 in a new purple color.
Apple’s other products and services — it has music and TV streaming services, just announced a new key- and backpack-tracking device called AirTags, and computers and tablets — are also growing.
“We are proud of our March quarter performance, which included revenue records in each of our geographic segments and strong double-digit growth in each of our product categories, driving our installed base of active devices to an all-time high,” said Luca Maestri, Apple’s CFO. “These results allowed us to generate operating cash flow of $24 billion and return nearly $23 billion to shareholders during the quarter. We are confident in our future and continue to make significant investments to support our long-term plans and enrich our customers’ lives.”
The company’s steadily expanding services division generated revenue of $16.9 billion during the quarter. That division includes 15% to 30% commissions that Apple collects from most paid transactions completed with iPhone apps. Regulators in different countries are scrutinizing how Apple extracts payments through the App Store.
The issue will be the focal point of a federal court trial scheduled to start May 3. Epic Games, the maker of the popular video game Fortnite, will try to prove its contention that Apple has turned its app store into a weapon for shaking down smaller companies for unconscionably high fees to boost its own already huge profits.
Apple insists its fees are reasonable in light of its massive investment in the iPhone and its “walled garden” approach help protect the security of its devices and its customers.
The stock rose 4% in aftermarket trading Wednesday.