UPDATED with executive comments. Apple’s results in the fiscal first quarter edged Wall Street’s estimates, sending shares climbing in after-hours trading.
The tech giant reported earnings per share of $4.18 in the October-to-December period, a penny better than the consensus expectation of Wall Street analysts. Total revenue fell 5% to $84.3 billion, which was about $300 million ahead of analysts’ projections and the company’s own forecast.
Revenue from iPhones reached almost $52 billion, down 15% and a shade lower than analysts had expected, but services revenue of $10.9 billion exceeded estimates.
Shares in Apple slid 1% during the trading day to close at $154.68. After reaching a peak level of $233 last summer, the stock has been in retreat as the company has reset expectations. The earnings news, though, sent shares up 6% after hours.
The quarterly conference call with analysts to discuss the results yielded precious little news. Asked directly about the company’s strategy for video — as hot a topic as there is in Hollywood, and a source of intrigue for anyone tracking the company — CEO Tim Cook said he had nothing new to say beyond noting the company’s recent pact with Oprah Winfrey.
Already, he noted, the company is participating in video through Apple TV and AirPlay. “Another way is of course all the third party video subscriptions that are on the store,” Cook said. “We’re participating in this today and I would guess that that’s going to accelerate into the future, as the bundle breaks down and people begin to buy likely multiple services in place of their current cable bundle.”
Ahead of today’s report, the company had already taken the unusual step of warning investors that it expected a down quarter, with sales of the iPhone and other devices showing softness during the holiday season. Troubles in China, from the country’s sluggish economy to its trade war with the U.S., have also weighed on results.
Increasingly, the company has emphasized the company’s services unit, which includes Apple Music and iCloud. Gross margins in the segment exceeded 62% in the quarter, significantly higher than the company’s overall gross margin of 38%.
In addition to some inauspicious trends in terms of device sales, the company said last November that it would disclose gross margin results for its services and products segments but not provide unit sales numbers for products.
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.