Apple is still reaping huge profits from the iPhone while mining more moneymaking opportunities from the growing popularity of its smartwatch, digital services and wireless earbuds.
That combination produced a banner season for a company whose fortunes appeared to be sliding just a year ago amid declining sales for the iPhone, its marquee product for the past decade.
Apple's fiscal first-quarter results, released Tuesday (US time), provided the latest proof that the fears hanging over the consumer electronics icon might have been unfounded.
Apple's profit and revenue for the October-December period topped analysts' projections, providing another boost to a stock that has more than doubled in less than 13 months.
The shares surged by more than 2 per cent to US$325.33 ($497.11) in extended trading after the numbers came out. That's up from US$142 in January 2019 after Apple warned that consumers weren't buying new iPhones at the clip that they once were, especially in China, the company's biggest market outside the US and Europe.
If the stock gains in similarly in Wednesday's regular trading session, it will mark a new all-time high for the stock and further cement Apple's position as the most valuable company in the US, with a market value of US$1.4 trillion.
The mystery virus that has recently been killing people in China now looms as a potential concern for Apple, but investors for now are focusing on what now looks like an even more prosperous road ahead for a company that turned a US$55 billion profit in its past fiscal year.
Apple got off to a fast start for fiscal 2020, with a first-quarter profit of US$22.2b, or US$4.99 per share, on revenue of US$91.8b. Analysts polled by FactSet had predicted earnings of US$4.54 per share on revenue of US$88.5b.
As usual, the iPhone remained Apple's marquee attraction. Boosted by the release of the iPhone 11 heading into the holiday season, the product generated sales of US$56b, an 8 per cent increase from the previous year's disappointing showing.
Besides rolling out high-end phones with more cameras and starting price of US$1,000, Apple also sold a more basic model starting at US$700 — a US$50 drop from a comparable version released in 2018.
Apple's division that includes its app store, product warranties, music streaming and a new Netflix-like video service delivered revenue of US$12.7b, up 17 per cent from the previous year. Apple is hoping its service division will produce revenue of at least US$50b this year, doubling its output in just four years.
The services division is feeding into all iPhones, iPads, Macs and other Apple products already being used, which the company said Tuesday now totals 1.5 billion devices, up by 100 million from the previous year. ""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," Apple CEO Tim Cook said in a statement.
The Apple TV Plus video streaming service that Apple launched amid great fanfare in October is supposed to help that cause, but it may not be a huge contributor this year. That's because Apple is initially selling it for just US$5 per month to help drum up interest. That's less than half the price of Netflix's most popular plan.
What's more, Apple is giving away a free year of Apple TV Plus to anyone who buys a new iPhone or several other devices, a promotion that means tens of millions of people aren't paying anything for the service yet. Apple didn't disclose how many subscribers the service had at the end of its first quarter in operation.
Meanwhile, the Apple Watch that the company began selling nearly five years ago continued to gain new converts and the latest version of its wireless earbuds, AirPods, emerged as a hot commodity during the holiday season.
Apple introduced the AirPods after removing the headphone jack from the iPhone in 2016, but the product picked up more momentum in October with a next-generation set designed to fit better in people's ears. That version, called AirPods Pro, proved so popular that Apple had trouble keeping it in stock. The AirPods Pro also cost more at US$250, up from US$160 to US$200 from the previous generation.
All those factors helped Apple's "wearables, home and accessories" category garner sales totaling US$10b in the past quarter, a 37 per cent increase from the previous year. That makes this category Apple's fastest growing division.