Apple Q4 net profit drops as operating expenses climb

Net sales of its products including iPhones, Macs and iPads jump to $64.7bn

Apple on Thursday reported a 7 per cent drop in its fourth-quarter profit . AP 

Apple reported a 7 per cent drop in its fourth-quarter profit as total operating expenses rose, despite higher sales of its products especially Macs, iPads, wearables, home and accessories.

Net profit for the three months period ending September 26 declined to $12.67 billion, the company said in a statement on Thursday. Total operating expenses climbed 15 per cent to $9.9bn and net sales rose about 1 per cent to $64.7bn.

Apple stock dropped over 4 per cent in extended trading in New York.

“Apple capped off a fiscal year defined by innovation in the face of adversity with a September quarter record, led by all-time records for Mac and Services,” said Tim Cook, the company’s chief executive. “Despite the ongoing impacts of Covid-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone lineup, has been tremendously positive.”

Sales of iPhones dropped 21 per cent year-on-year to $26.4bn, while sales of Macs, iPads, wearables, home and accessories as well as services rose during the period, according to the company. Americas registered the highest sales followed by Europe. However, sales dropped in China.

Apple earlier this month launched its iPhone 12 series, the company’s first 5G-enabled phones, as the competition for fifth-generation technology dominance heats up.

The new models – the iPhone 12 mini, iPhone 12, iPhone 12 Pro and iPhone 12 Pro Max – were released at an event at the company’s headquarters in Cupertino, California, on October 13, which was held online this year due to the Covid-19 pandemic.

“Apple offered no guidance on iPhone 12 sales over Christmas, Facebook reported a decline in US MAUs (Monthly Active Users) and Amazon is expecting a big jump in costs with uncertain holiday sales,” Jasper Lawler, head of research at the London Capital Group, said. “These things are not the perfection the stocks are priced for. The exception to the rule is Google-owner Alphabet which bested estimates thanks to strong growth in advertising revenues.”