Apple reported all-time record profits for its fiscal first quarter, which included the holiday season, following a month of speculation after CEO Tim Cook warned investors that revenues would slow.
The company reported earnings of $4.18 per share, narrowly beating Wall Street’s expectations of $4.17 per share. Revenues were down 5 percent for the fourth quarter from a year ago at $84.3 billion.
In a letter to shareholders earlier this month, Apple CEO Tim Cook said slowing growth in China would weigh on sales. “While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” he wrote at the time.
Cook was right to be concerned. Greater China sales plummeted 27 percent, or $4.8 billion, from the same period last year. That shortfall more than accounted for the year-over-year dip in overall sales of $4 billion.
International sales accounted for 62 percent of the company’s revenue. European sales fell 3 percent, and sales in the Americas rose 5 percent.
The company’s gross margin came in at 38 percent, in line with the earlier guidance.
Revenues from the iPhone declined 15 percent from the prior year. Apple no longer reports how many units of its most popular products were sold, following a change announced in November. Higher iPhone prices have allowed revenues to rise even as the company sold fewer phones.
Revenues from Apple’s services segment, which includes iCloud, iTunes and Apple Pay, grew 19 percent to $10.9 billion.
Apple issued the following guidance for its fiscal second quarter:
- Revenue between $55 billion and $59 billion
- Gross margin between 37 percent and 38 percent
- Operating expenses between $8.5 billion and $8.6 billion
- Other income/(expense) of $300 million
- Tax rate of approximately 17 percent