The late launch of new 5G phones caused Apple Inc's customers to put off buying new devices, leading the company on Thursday to report the steepest quarterly drop in iPhone sales in two years.
Apple fell over 5 per cent at one point in after-hours trade, wiping $100 billion from its stock market value.
Since 2013, Apple has delivered new iPhones each September like clockwork. But pandemic-induced delays pushed the announcement back a month, with some devices still yet to ship.
Sales drop
Even as booming sales of Macs and AirPods boosted overall revenue and profit above what analysts had expected, iPhone sales dropped 20.7 per cent to $26.4 billion.
Investors anticipated lower sales from the Cupertino, California company's bestselling product, but the hold-back was worse than expected, especially in China, where more consumers have access to 5G than in the US or Europe.
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Apple has mostly beaten sales expectations this year and released a slew of new products and services that its customers have embraced while largely homebound during the pandemic.
Apple said revenue and profits for the fiscal fourth quarter ended on September 26 was $64.7 billion and 73 cents per share, compared with analyst estimates of $63.7 billion and 70 cents per share, according to IBES data from Refinitiv.
But the flagship iPhone 12's announcement was delayed until October 13, several weeks later than usual, meaning no opening-weekend iPhone sales are included in the fourth-quarter results.
Tim Cook ‘optimistic’
In an interview with Reuters, Apple Chief Executive Tim Cook said that he was “optimistic” about the iPhone 12 cycle based on the first five days of shipping data.
“5G is a once-in-a-decade kind of opportunity. And we could not be more excited to hit the market exactly when we did,” Cook said. “At least in the US, the carriers are being very aggressive.”
The iPhone 12 release timing drove down sales in Greater China by 28.5 per cent to $7.95 billion. Cook said he expects the new 5G devices to help iPhone sales recover in China.
Apple has offset volatile iPhone sales in recent years with steady growth in its services segment, which includes streaming music and television. Services revenue rose 16.3 per cent to $14.5 billion, compared with analyst estimates of $14 billion. Cook told Reuters that Apple One, a bundle of Apple's paid services, will launch on Friday.