Coronavirus infects iPhone sales, slowing Apple’s growth

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Apple said its quarterly revenue increased 1% from last year, as the global coronavirus pandemic hurt iPhone sales and made it harder for the company to manufacture its products.

For the first quarter of 2020, Apple’s fiscal second quarter, sales totaled $58.3 billion. That was better than the $54.6 billion analysts had expected. In February, Apple withdrew its earlier forecast that revenue would total $63 billion to $67 billion. Net income per share of $2.55 was up 4%, also much better than analysts had expected.

While overall sales increased slightly, iPhone sales dropped 7%. “Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” CEO Tim Cook said in a statement.

The coronavirus pandemic has crushed sales of discretionary consumer purchases around the world, and Apple products have been no exception. The company’s supply chain has also been disrupted as many factories in Asia shut down. The virus interrupted a strong rebound in iPhone sales at the end of last year. Just three months earlier, in the 2019 holiday quarter, iPhone revenue had increased 8% to almost $56 billion, helping Apple’s total sales hit a record $91.8 billion.

But with growing concerns about how Apple will fare this quarter and for the rest of the year, Apple’s stock price dropped nearly 2% to $288.23 in aftermarket trading on Thursday. Over the past three months, Apple’s shares have lost 10% amid growing concern about the damage wrought by the spread of COVID-19. The stock has done slightly better than the S&P 500 index, which dropped 11% over the same period, but not as well as some rivals, like Amazon, which has seen its stock gain 33%.

Apple typically gives analysts guidance about its expectation for revenue, expenses, and other items in the current quarter but it did not do so on Thursday. Still Cook and CFO Luca Maestri offered some descriptions of how they expected sales would go. The trend remains negative for iPhones and wearables, but should improve for Macs and iPads. “That’s customers either taking online education or working remotely,” Cook explained on a call with analysts.

Apple’s supply chain was impaired in February, particularly due to factory closures in China. But it has since bounced back to typical levels, Cook said. “If you look at the shock to the supply chain that took place this quarter, for it to come back up so quickly really demonstrates that it’s durable and resilient,” Cook told analysts. “That said, we’re always looking at tweaks. It’s just not something we talk about…We will look to see what we learned and what we should change.”

For the completed past quarter, services revenue, which includes everything from Apple Music to Apple’s cut of app sales to iCloud storage plans, was a source of strength, rising 17% to $13.3 billion.

Wearables, which includes the Apple Watch, headphones, and earphones, increased 23% to $6.3 billion.

More must-read tech coverage from Fortune:

—How T-Mobile shifted 12,000 employees to work from home in less than two weeks
Coronavirus patient data stored in electronic health records found difficult to study at scale
Cybercriminals adapt to the coronavirus faster than the A.I. cops hunting them
Elon Musk calls COVID-19 lockdowns “fascist,” distracting from another Tesla earnings win
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Zoom’s ups and downs since the coronavirus crisis

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