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Apple (AAPL) released its first quarter results after the bell on Thursday, with iPhone sales beating expectations and both revenue and bottom line beating analysts’ expectations. But warning signs about the company’s business in China have given investors a chill over the market, which accounts for about a fifth of Apple’s sales.
During the quarter, Apple had earnings of $2.18 per share on revenue of $119.6 billion. Analysts had expected revenue of $117.9 billion and profit of $2.11.
Apple reported iPhone sales of $69.7 billion, compared to the expected $68.6 billion. However, sales from China, the company’s third-largest region after North America and Europe, were lower than expected, peaking at just $20.8 billion. Wall Street was looking for $23.5 billion in sales.
The company’s shares fell more than 2% in premarket trading Friday.
Apple is grappling with both China’s economic downturn and the resurgence of Huawei in the country, which has hurt sales in the region. However, strong performance in both North America and Europe buoyed the company.
“Today, Apple announced record sales growth in the December quarter, driven by iPhone sales, and record service revenue,” Apple CEO Tim Cook said in a statement. I will report this.”
“We are pleased to announce that our installed base of active devices has reached an all-time high of more than 2.2 billion devices, across all product and geographic segments.
Apple’s Mac sales reached $7.8 billion in the first quarter, lower than analysts’ expectations of $7.9 billion. The company’s iPad revenue also fell short of $7 billion. Wall Street was asking for $7.1 billion. That’s a significant decrease from the $9.4 billion the iPad business generated last year.
Apple plans to launch refreshed iPads and Macs in March, which could help boost sales in both business segments over the next year, according to Bloomberg’s Mark Garman.
Wearables, Home and Accessories generated $12 billion in sales, exceeding expectations. Apple is in an ongoing patent battle with medical device maker Masimo, which has forced the company to temporarily remove devices from stores.
The company has since removed the controversial blood oxygen sensor component from its Series 9 and Ultra 2 watches, but it’s unclear how much that affected sales.
Meanwhile, Apple’s services division hit $23.1 billion, below expectations of $23.4 billion.
Apple’s gains come as the company prepares to launch its Vision Pro AR/VR headset. The device, which Apple calls the Spatial Computer, will be available on February 2nd for $3,499. And while it’s certainly an impressive product, its price will likely limit sales for most consumers.
Apple hasn’t announced exact device sales numbers, but we’ll be waiting to see what CEO Tim Cook will say about the early uptake of Vision Pro pre-orders and how the developer community will react. It will be interesting to see. At the end of the day, for Vision Pro to be successful, developers need to build apps for it.
daniel howley I’m the technology editor at Yahoo Finance. He has been covering the technology industry since his 2011. You can follow him on Twitter. @Daniel Howley.
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