Apple profit slips as revenue edges higher in pandemic

Apple said it made a profit of $11.2 billion on sales of $58.3 billion in the fiscal second quarter, compared to net income of $11.7 billion on revenue of $58 billion in the same period a year earlier.

“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” chief executive Tim Cook said in an earnings release.

Apple shares were down nearly two percent in after-hours trades that followed release of the earnings figures.

Revenue from iPhones — the big earnings segment for Apple in recent years — dropped some seven percent from a year earlier to $29 billion in a period where smartphone sales have been sagging.

“Everyone knew that March would be rough for Apple, but given the effects of coronavirus on supply chains in China and demand everywhere, Apple’s performance was pretty solid,” said eMarketer analyst Yoram Wurmser.

“In this environment is impressive, particularly given some of the extent of Apple’s exposure to the earlier lockdowns in Asia.”

The pandemic hit Apple on multiple fronts, disrupting its suppliers in China and the finances of its customers.

In early April, Apple unveiled a new entry-level iPhone, aiming to appeal to consumers facing a suddenly bleak economic backdrop.

The updated iPhone SE has a starting price of $399, or less than half the price of its flagship devices.

The premium smartphone market, where iPhones dominate, has been “saturated” for a while and people have been waiting longer to upgrade to new models that have lacked changes dramatic enough to inspire spending.

Apple boosted its services revenue by 17 percent in the quarter, as part of its efforts to diversify its income as smartphone sales slip.

The company said earlier this month that Apple Music is being expanded to 52 additional countries and territories while 20 new countries were being added to its App Store.