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Technology

Apple revenue at all-time high as China market returns to growth

Coronavirus outbreak clouds outlook for next quarter

PALO ALTO, U.S. -- Apple's revenue hit an all-time for the three months through December as iPhone sales returned to growth for the first time since 2018. But while sales in China beat expectations, the recent coronavirus outbreak in the region is dragging on the U.S. smartphone maker's outlook for the next quarter.

Apple recorded revenues of $91.82 billion for the first quarter of its 2020 fiscal year, beating its own guidance and Wall Street's consensus estimate, the company announced in an earnings call on Tuesday. The greater China region, which includes the mainland, Hong Kong and Taiwan, contributed greatly to the company's strong overall performance. Sales there returned to growth after a year-long dip, rising 3% on the year to $13.58 billion

Sales of the company's mainstay product -- the iPhone -- increased for the first time after declining for four consecutive quarters, reaching $55.96 billion, up 8% on the year, according to the earnings result.

Mainland China in particular saw double-digit growth in iPhone sales during the quarter as the new iPhone 11 series was particularly well-received.

"It was a terrific quarter [in China] and we had three of the top four selling smartphones in urban China," said Apple CEO Tim Cook.

The better-than-expected quarterly performance and the revival in iPhone sales helped push Apple shares 1.2% higher in after-hours trading.

The Nikkei Asian Review previously reported that Apple has asked suppliers to make up to 80 million iPhones over the first half of this year, an increase of over 10% from last year's production schedule. But industry sources also warned the planned increase in iPhone faces massive uncertainties due to the ongoing coronavirus crisis.

Apple executives said during the earnings call that they have factored in the uncertainties related to the "unfolding public health situation in China" by providing a wider than usual revenue guidance range for its second quarter, which ends in March.

The company said they have closed one of the retail stores and a number of channel partners have also closed their storefronts in China.

"While our sales within the Wuhan area itself are small, retail traffic has also been impacted outside of this area across the country in the last few days," Cook said.

"We do have some suppliers in the Wuhan area [but for] all of these suppliers, there are alternate sources. And we're obviously working on mitigation plans to make up for any expected production loss," he added.

Due to the uncertainties on both the sales and production sides, Apple set its second-quarter revenue guidance at $63 billion to $67 billion.

"The situation is emerging and we're still gathering lots of data points and monitoring it very closely," Cook said.

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