Analysts have talked for at least a year about the potential for Apple's first 5G iPhone to drive a "supercycle" of device sales.
On Wednesday, Apple's earnings report for the three months ended December 26 — the first since the iPhone 12 went on sale — offered an initial look at how actual sales are stacking up against that projection.
Strong iPhone sales pushed the company's total quarterly revenue to a record US$111.4 billion ($145.89 billion) — well above the US$103.3 billion ($135.28 billion) Wall Street analysts had predicted.
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Apple posted earnings of US$16.8 per diluted share, up 35 per cent from the same period in the prior year.
iPhone sales were also even better than expected: Growing more than 17 per cent year-over-year to nearly US$65.6 billion ($85.91 billion), compared with the US$59.8 billion ($78.31 billion) analysts had expected.
Apple executives last quarter had said they expected single-digit percentage growth in iPhone sales during the December quarter.
The total active installed base of iPhones worldwide is now over 1 billion, "driven by strong demand for the iPhone 12," CEO Tim Cook said on a call with analysts Wednesday.
Despite the strong results, Apple's stock fell more than 2 per cent in after-hours trading Wednesday.
"In our view, the iPhone 12 has been Apple's most successful product launch in the last five years," Morgan Stanley analysts wrote in a note to investors last week, ahead of the report.
The company also announced a cash dividend of US$0.205 per share, payable on February 11 to shareholders of record as of close of business on February 8.
The report comes as Apple's stock has largely continued to soar in recent weeks. Its market cap this week reached an all-time record above US$2.4 trillion ($3.14 trillion).
"Our December quarter business performance was fuelled by double-digit growth in each product category, which drove all-time revenue records in each of our geographic segments and an all-time high for our installed base of active devices," Apple CFO Luca Maestri said in a statement.
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Why so much pressure on the iPhone 12?
Hopes have been high for the iPhone 12 because it's the first Apple device that can connect to 5G, the superfast wireless networks expected to create new capabilities for consumers and businesses.
The past several iPhone releases "haven't really given users a reason to upgrade," Tyler Ellegard, investment analyst at Gradient Investments, said in an interview ahead of the results. That led to disappointing iPhone sales numbers in recent years.
With the iPhone 12, experts predicted 5G connectivity could be a big enough change to encourage hundreds of millions of Apple users to upgrade.
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The fast download speeds and low lag time that 5G enables could make for a better experience using Apple services such as Apple Arcade.
However, there were also major questions surrounding the iPhone 12 launch: Would people really shell out for an upgrade during the economic recession caused by the pandemic? And with 5G networks still in their early days, would consumers experience enough of a difference to even want to?
D.A. Davidson Analyst Tom Forte said in a note last week that he believed Apple's lineup of 5G smartphones was "better positioned than investors completely appreciate," in part because of carrier promotions.
Some of the iPhone sales growth may not be because of 5G, but simply because consumers who hadn't upgraded in a few years wanted other perks, such as the iPhone 12's impressive array of camera features, Ellegard said.
Ahead of the earnings release, many analysts said they expected iPhone 12 sales would skew toward the higher-end Pro and Pro Max models.
That may have contributed to the improvement in Apple's gross margin during the December quarter — overall gross margin was 39.8 per cent, up 160 basis points from the prior quarter, and products gross margin improved by 530 basis points compared to the prior quarter.
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Source: 9News https://www.9news.com.au/world/apple-posts-record-145-billion-revenue-quarter-iphone-12-sales-boom/a286d1cb-42f4-43a9-baa4-1941a01b8eda