Apple posted improved results for its fiscal second quarter, with earnings per share of $2.46 per share outdoing analysts’ consensus forecast of $2.37. The company on Tuesday reported total revenue of $58 billion for the period ending March 31, also exceeding estimates for $57.5 billion.
Apple stock fell 2% during the trading day to finish at $200.67, in the worst pre-earnings dropoff in four years, but it rallied about 5% in initial trading after hours. It wasn’t the only major tech issue to sell off today, though: Google parent Alphabet, which reported disappointing first-quarter earnings yesterday, had one of the worst days in its history. Alphabet lost $99.10 per share, or nearly 8%, to end the day at $1,188.48. About $67 billion in market value evaporated due to the downturn.
Apple today said revenue from iPhones totaled $31.05 billion. While that was down slightly from the $38.03 billion in the year-ago period, it was higher than the $30.5 billion Wall Street consensus. The tech giant is in the midst of a transition from hardware sales toward services like Apple Pay and Apple Music.
Services have yielded a more predictable revenue stream given the lack of manufacturing complexities and investments that must be precision-timed to satisfy consumer demand. While the most recent iPhones have been well-received, the price point is higher and the need for upgrades has diminished, crimping sales. The company’s holiday quarter, ending December 31, yielded a drop in iPhone sales for the first time, sending many investors to the sidelines.
CEO Tim Cook led a two-hour unveiling of new initiatives in March, half of which was devoted to the forthcoming streaming service Apple TV+. It too will aim to take advantage of Services revenue, with the so-called “Apple tax” or 30% being applied to pass-through sales of third-party apps from Starz, CBS Corp. and others.
Few concrete details were revealed about the TV launch, including even basics like launch date and pricing, during the March event at the company’s Cupertino, CA campus. Analysts and others who watch the company closely expect executives to divulge few new details during any Wall Street settings.
The company is joining a crowded streaming space, with Disney, WarnerMedia and NBCUniversal all readying major new offerings.