The Late Launch of New 5G Phones Caused Apple Inc’s Customers to put off Buying New Devices
By: Ashwathy Nair
- Wiping $100 billion from the stock market, Apple fell over 5% at one point in after-hours trade.
- Sales of the iPhone dropped 20.7% to $26.4 billion.
- Announced a range of new goods and services that have been accepted by its customers.
In two years, the late launch of new 5G phones reported the sharpest quarterly drop in iPhone sales that caused Apple Inc’s to put off buying new devices.
Wiping $100 billion from the stock market, Apple fell over 5 per cent at one point in after-hours trade.
Apple has been delivering new iPhones each September like clockwork since 2013. But due to the delay occurred by the pandemic, it pushed the announcement back a month, with some devices that are still yet to be shipped.
Sales of the iPhone have dropped 20.7% to $26.4 billion, even as successful sales of Mac and AirPods had boosted the overall revenue and profit above the expectation.
In China, where most of the consumers have access to 5G, the investors have anticipated a lower sales from the Cupertino, California Company’s bestselling products, but as expected the hold-back was worse.
As per the IBES data from Refinitiv, the revenue and profit for the fiscal fourth quarter of Apple ended on September 26 were $64.7 billion and 73 cents per share as compared with analyst estimates of $63.7 billion and 70 per cents share.
But there was a delay on the flagship iPhone 12’s announcement until 13th October, several weeks later than usual, which means no opening-weekend iPhone sale is included in the fourth-quarter results.
Tim Cook, the chief executive of Apple, in an interview with Reuters, said that he was “optimistic” about the iPhone 12 cycle based on the first five days of shipping data.
“5G phones is a kind of chance, that comes once in a decade. And precisely when we did, we could not be more excited to reach the market,” Cook said. “In the U.S., at least, carriers are very hostile.”
The timing of the iPhone 12 release dropped sales by 28.5 per cent to $7.95 billion in Greater China. Cook said he hopes to help iPhone sales recover in China with the latest 5 G smartphones.
Apple did not offer a sales growth estimate, but in line with analyst estimates, Chief Financial Officer Luca Maestri said, sales from services and non-iPhone items would rise by double-digit percentages in the fiscal first quarter. He said it would also boost iPhone sales, suggesting that the rate would be in the single digits. According to Refinitiv reports, analysts expect iPhone sales to increase 6.45 per cent to $59.56 billion in the first quarter.
Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: “Apple needs to be able to keep the upgrade cycle going or the share price would wobble because there is no clear room for forgiveness in the current valuation.”
