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Strong growth in Apple’s services business helped push the iPhone maker to top Wall Street’s expectations in its fiscal second-quarter despite reduced iPhone demand and supply chain difficulties related to the coronavirus pandemic and worldwide store closures.
Apple reported quarterly revenue of $58.3 billion for the three-month period ending in March, a modest increase of one percent compared to the same period one year ago. Earnings per share came in at $2.55. Wall Street analysts expected $54.54 billion in quarterly revenue and adjusted earnings of $2.26 per share.
The tech giant broke tradition, like many other companies, by not providing guidance for the upcoming quarter due to uncertainty related to the pandemic. Apple CEO Tim Cook addressed the decision in an interview with FOX Business Network’s Susan Li.
“We have lots of confidence in the long term, we have very little visibility in the short term,” Cook said. “Because of that, we’re not guiding, which we typically do, but we are not going to do that this particular quarter because it would seem to send a signal that we know what is going on when in reality it’s hard to see out the windshield right now.”
Cook did note that he is optimistic about the U.S. economic recovery due to the stimulus money being distributed.
As for store openings, Cook expects those to be measured around the globe, if it is safe to do so, with some U.S. openings potentially set for mid-May.
Shares were mostly unchanged in after-hours trading but have gained over 15 percent during the past month as the broader equity market recovers. April was the best month for the Dow Jones Industrial Average and S&P 500 since 1987.
Apple’s services segment includes the iCloud, Apple Card and Apple Pay, as well as the company’s news, music and entertainment offerings. The unit generated a company record of $13.34 billion in revenue for the quarter as Americans relied on technology to stay connected while sheltering in place.
Revenue for iPhone sales, Apple’s most lucrative category, dropped seven percent to $28.96 billion.
The company boosted its dividend six percent to 82 cents per share. Apple’s board of directors also approved a $50 billion boost to its share buyback program.
“We are proud of our Apple teams around the world and how resilient our business and financial performance has been during these challenging times,” said Luca Maestri, Apple’s CFO. “Our active installed base of devices reached an all-time high in all of our geographic segments and all major product categories."
Maestri affirmed that Apple intends to keep its five-year commitment to contribute $350 billion to the U.S. economy.
Apple warned in February that it expected to fall short of its initial second-quarter guidance. At the time, company executives noted "worldwide iPhone supply will be temporarily constrained" due to interruptions at its production facilities in China during the pandemic.
Prior to the warning, Apple said it expected to earn $63 billion to $67 billion in revenue. At the time, the company said it provided a wider range of guidance than usual because of uncertainty related to coronavirus.
All of Apple’s retail stores outside of China have been closed since March. Locations are not expected to open until early May at the earliest.
Cook was one of several tech CEOs named to President Trump’s advisory task force on reopening the U.S. economy in the coming months.