Fueled by strong growth in iPads and Macs during a broad global shift to employees working from home, Apple Inc. posted record fiscal fourth-quarter revenue of $64.7 billion and a profit of 73 cents a share, slightly beating Wall Street estimates on both fronts.

However, the company’s stock fell more than 5% after hours, probably in response to management’s decision not to provide guidance for the coming quarter, which is historically its largest. Apple followers are particularly keen on knowing what the company’s expectations are for its iPhone 12, the launch of which was delayed this year due to the COVID-19 crisis.

“Personally, I find that a reasonable position given the continuing challenges of COVID-19 and uncertainties around the U.S. election, but that was not what shareholders wanted to hear,” said Pund-IT Inc. President Charles King.

Pressed by analysts, Chief Executive Tim Cook wouldn’t offer precise forecasts of iPhone 12 sales, but he painted a strong demand for the phone, which will be Apple’s first to support the 5G wireless standard.

“For the first time ever we’ve launched four iPhones and it’s the strongest lineup we’ve ever had,” he said. “We have a once-in-a-decade opportunity with 5G and some aggressive offers in the marketplace. When I look the total of those I see that we are off to a great start.” Cook added that iPhone demand growth was in the double digits in mid-September.

‘Did it again’

“Apple did it again,” said Barbara Peck, principal analyst at Nucleus Research Inc. “While the stock dropped today, Apple is still a sure bet. I predict that the iPhone 12 sales will boost next quarter’s revenue significantly.”

Apple set all-time records for revenue, earnings per share and free cash flow in the quarter despite product delays, the temporary closing of some of its stores and the complexity of pulling off a global product launch during the lockdown. “If I had to describe our performance this quarter in a single word, it would be resilient,” Cook said.

International sales accounted for 59% of quarterly revenue. Sales were up nearly 5% in the Americas and 13% in Europe but down 29% in China. The company offered no explanation for the plunge in its China business.

Sales of iPhones in the quarter fell nearly 21%, to $26.4 billion, clearly hurt by the delayed iPhone 12 launch. However, analysts largely brushed off the figure as an anomaly. “Apple should make up the shortfalls in the coming quarters with sales of the new iPhone models, but investors were clearly disappointed,” King said.

Yoram Wurmser, principal analyst at eMarketer Inc., agreed that the quarterly downturn shouldn’t be cause for alarm. “Given that the 5G phone has been heavily touted, it could be a supercycle for phone sales, but there’s little direct evidence for this yet,” he said.

EMarketer estimates that Apple has 45.6% of the U.S. smartphone market, a share that has held steady this year. It also says Apple has adjusted well to the shift to online sales, with $27.51 billion in U.S. ecommerce sales in 2020, up 32% over 2019 and comprising 3.5% of the country’s total ecommerce sales.

That decline in iPhone sales was offset by strength in other areas, particularly in services and compute equipment bought by office workers seeking to upgrade their technology at home. Services revenue rose 16%, to $14.5 billion. Mac sales grew 29%, to $9 billion, iPad sales jumped 46%, to $6.8 billion, and wearables increased nearly 21%, to $7.9 billion. “The quarter was largely saved by stellar performance in both iPad and Mac sales, and by steady growth with killer margins in services,” King said.

For the full year, Apple reported sales of $274.5 billion, up 5.5% over 2019. Net income rose nearly 4%, to $57.4 billion. The company ended the fiscal year with about $98 billion in cash and securities, net of debt.

Nucleus Research’s Peck said that though growth was strong everywhere except in the iPhone segment, services revenues were slightly below expectations. “It calls into question whether Apple TV, Watch apps and wearables aren’t selling as well as anticipated, or that they’re simply slower to ramp up their sales,” she said.

But Cook said the results overall showcase Apple’s adaptability and innovation. “Our team rebuilt every part of the plane while it was in mid-air and the results speak for themselves,” he said.

Another analyst was inclined to agree. “The fact that total company revenue grew year-on-year despite a big fall in iPhone revenue underlines the increased diversification of Apple’s product lines,” said Geoff Blaber, vice president of research for the Americas at CCS Insight. “The iPhone remains the anchor product but 2020 has shown that Apple’s broader business is resilient and can weather shifts in demand to its core product.”

Photo: Apple/livestream