SAN FRANCISCO – Apple Inc.’s new iPhones are expected to help the technology giant return to growth in the key holiday period, supported by a growing collection of other products and services.
The company has projected fiscal first-quarter revenue that beat analysts’ estimates, signaling solid demand for iPhone 11 models, new services like Apple TV+ and wearables such as upgraded AirPods and the Apple Watch.
The shares rose, but gains were limited. Optimism was tempered by falling revenue in many markets outside the Americas, a weaker performance from the Mac computer division and a surge in the stock ahead of the results Wednesday.
Fiscal first-quarter sales will be $85.5 billion to $89.5 billion, the Cupertino, California-based company said in a statement. Analysts were looking for $86.5 billion, according to data compiled by Bloomberg.
Chief Executive Officer Tim Cook said “we’re very optimistic about what the holiday quarter has in store.” During a conference call with analysts, the CEO went further by saying early trends looked very good based on the uptake of the new phones. “You can tell from the guidance we are bullish,” he added.
The new forecast means Apple is likely to return to growth, after missing sales targets in last year’s holiday period. Fiscal fourth-quarter revenue and profit also topped Wall Street estimates.
“This was a strong quarter and this should silence some of the concerns out there regarding the iPhone,” said Shannon Cross of Cross Research. “The guidance was also strong.”
Apple shares rose about 2 percent in extended trading Wednesday. The stock closed at $243.26 in New York earlier on Wednesday, leaving it up more than 50 percent this year.
While Apple has developed different devices and new digital services in recent years, it still relies on the iPhone for more than half of its revenue and profit. The handsets are also the hub for the company’s other offerings, so investors remain transfixed by the fortunes of the iconic device.
Analysts had become increasingly bullish on iPhone 11 sales. Apple cut some prices and has offered more attractive trade-in deals. And there are hundreds of millions of aging iPhones that will need to be upgraded soon.
Still, a trade war between the U.S. and China has sparked concern that Chinese consumers may favor domestic smartphones over Apple’s product. And lower iPhone prices have some analysts worried that revenue growth will be harder to come by.
The latest iPhones and Apple Watch went on sale on Sept. 20 and the quarter ended on Sept. 28, so Apple’s fiscal fourth-quarter results included some early sales of these devices.
Apple reported fourth-quarter sales of $64 billion, up 1.8 percent from a year earlier. Net income was $13.7 billion, or $3.03 a share, versus $14.1 billion, or $2.91 a share, in the same period last year. Analysts were looking for revenue of $63 billion and profit of $2.84 a share.
The company said it had sold $33.4 billion worth of iPhones in the quarter, beating analysts’ estimates of $32.3 billion but still down from $36.8 billion in the year-ago quarter.
The wearables, home and accessories segment, which includes the Apple Watch, AirPods, HomePod, Apple TV, and Beats headphones, generated $6.5 billion in revenue — an increase of 54 percent, easily topping Wall Street’s estimates.
The services division is growing at a faster rate. This quarter, revenue jumped 18 percent from a year earlier. In the fiscal third quarter sales rose 13 percent.
Apple Arcade, the company’s video game service, launched on Sept. 19 with a one-month free trial, so Apple did not generate any revenue from the $4.99-a-month offering in the fiscal fourth quarter. Apple TV+ launches Friday, while the Apple Card and Apple News+ debuted earlier this year.
Still, sales fell in several areas outside the U.S.
In China, revenue slipped 2 percent to $11.1 billion. Sales in Japan and Europe also declined.
Apple said it had generated $7 billion in revenue from the Mac segment. That was down 5 percent and missed Wall Street expectations.