Apple Inc.’s Latest Quarter Was A Blockbuster

Apple Inc. reports new, more expensive models of the iPhone 12 have been a hit with customers, and revenue from Mac computers and iPads also rose during the quarter on strong demand from employees and students conducting their work at home.

The Wall Street Journal reports Apple’s fiscal second-quarter results set new highs in what could be a record-setting year for profit and revenue. Analysts predict full-year profit will exceed $70 billion, nearly a third more than last year.

The company reported a profit of $23.6 billion in the latest quarter as revenue rose 54% to $89.6 billion, far exceeding Wall Street expectations. The company also announced a 7% increase to its cash dividend to 22 cents a share and that the board had authorized an increase of $90 billion to an existing share-repurchase program.

Luca Maestri

“We feel very good, given the results we’ve had in the first half of our fiscal year,” Apple finance chief Luca Maestri said in an interview. “And clearly as economies start to reopen, particularly those economies where there are enough vaccines, obviously we think that should be a positive.”

While work-from-home trends helped Apple’s performance, Maestri said the company may see continued benefits from a hybrid work model. A return to more normal conditions could also boost other business lines, such as from an increase in the purchase of AppleCare, an extended warranty service the company offers, and advertising, which were negatively affected by the Covid-19 pandemic.

“It was obviously more difficult for us to sell iPhones and watches—that typically require a lot of interactions of our customers, particularly in the retail stores and in the carrier stores,” he said. “So that may provide an offset.”

Apple was able to avoid a microprocessor shortage in the March period. But Maestri cautioned, during a public conference call, that a shortage would contribute to a decline in revenue in the current quarter steeper than the typical falloff following the March period. Supply constraints will primarily affect Macs and iPads.

Apple still expects “strong double-digit” revenue growth from the year-earlier quarter, he said. The company stopped providing detailed guidance about coming quarters last year, as Covid-19 upended daily life around the world and initially sent markets falling amid fears of a global recession.

The real engine of 2021 is the latest iPhone: Overall iPhone revenue for the March quarter rose 65% to $47.9 billion. Analysts had expected a 42% rise.

Much of the growth last year was fueled in unexpected places. Apple saw record demand for Mac computers and an 11% rise in iPad tablet sales. That growth continued in the March period. On Wednesday, Apple said Mac sales rose 70% to $9.1 billion and iPads increased 79% to $7.8 billion. That beat analyst expectations for increases of 27% and 29%, respectively.