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Despite China Slowdown And Coronavirus Threat, Record Revenue And Profit Reported By Apple


Despite China Slowdown And Coronavirus Threat, Record Revenue And Profit Reported By Apple
Despite a slowdown in China – its largest market for iPhones outside of the United States, tech giant Apple reported its largest revenue ever and record quarterly profits for the last three months of 2019 driven by a surge in sale of iPhones.
This strong performance however comes amid fears that the company’s supply chain in China could get significantly disrupted because of the rapid spread of the coronavirus.
Apple reported revenue of $91.8bn for the quarter which easily beat market estimates. A lion’s share of the revenue, about $56bn, was accounted for by the sale of iPhones. This record revenue marks a turnaround for the iconic iPhone of the company which, experts had said, had reached its peak. Lower demand for iPhones was instrumental in the company reporting a very rare slowdown in the holiday quarter last year.
Questions about Apple’s over reliance on China as a market as well as a production hub for most of its products were raised for the chief executive, Tim Cook during a call with investors, especially because of the a real threat to production due to the outbreak of the coronavirus.
“We’re closely following the development of the coronavirus,” Cook said.
A wider than normal guidance range had been set by the company for next quarter, Apple said, as it announced a range of $63bn to $67bn for its revenues which was because of “greater uncertainty” because of the virus outbreak according to Cook.
“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” said Tim Cook, Apple’s CEO. “During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”
“Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion,” said Luca Maestri, Apple’s CFO. “We also returned nearly $25 billion to shareholders during the quarter, including $20 billion in share repurchases and $3.5 billion in dividends and equivalents, as we maintain our target of reaching a net cash neutral position over time.”
For the entire fiscal year of 2020, Apple forecast gross margin between 38.0 percent and 39.0 percent against revenues between $63.0 billion and $67.0 billion. Apple also said that it expected its operating expenses will be between $9.6 billion and $9.7 billion in the same period.
Apple also declared a cash dividend of $0.77 per share payable on February 13, 2020.
During the announcement of the quarterly results, Apple also said that it had restricted China travel for its employees to “business critical” because of the virus outbreak while being forced to close down one retail store in the country. At most of its other stores in China, the company has reduced the operational hours as means to take more precautions against the virus.
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