Credit
Marcio Jose Sanchez/Associated Press
SAN FRANCISCO — Apple’s next big business won’t be a self-driving car or an improved smartwatch. It will be digital services like the App Store and Apple Music.
The company said on Tuesday that such services brought in $7.2 billion in the quarter that ended in December, and $25.5 billion over the last 12 months.
“Our goal is to double the size of our services business in the next four years,” Timothy D. Cook, Apple’s chief executive, said in a conference call with investors to discuss the company’s financial results.
More difficult to predict is what the impact of President Trump’s policies will be on Apple’s business over the next four years.
Mr. Cook said he was optimistic about corporate tax cuts proposed by Mr. Trump and Republicans in Congress, and he noted that there was bipartisan support for reducing the tax on overseas profits that American companies must currently pay if they bring the money back to the United States.
He said such changes would be good for Apple and for the country. As of Dec. 31, Apple had $246 billion in cash and marketable securities, most of it in foreign accounts.
Mr. Cook said nothing on the call about Mr. Trump’s push to limit immigration, which has riled the technology industry.
Apple’s stock price over the last six months.
But in an interview with the Wall Street Journal published late Tuesday, he said that he has contacted senior people in the White House and that Apple is studying its legal options.
On Friday, the president signed an executive order restricting immigration from seven predominantly Muslim countries, prompting an outcry from Mr. Cook and other tech leaders. The administration is expected to issue another order soon that would change the rules for immigrant worker programs, including the H-1B visa program, which Apple and other tech companies rely on when filling many key jobs.
Mr. Trump has also publicly called on Apple to build its iPhones in the United States instead of China.
Luca Maestri, Apple’s chief financial officer, said in an interview on Tuesday, “We are working to understand what the new administration’s standpoint is.”
The strong growth in services will partly offset a slowdown in sales of Apple’s flagship product, the iPhone. Apple said the number of iPhones sold rose just 5 percent in the first fiscal quarter, which ended in December, despite the introduction of the iPhone 7 and iPhone 7 Plus in September. In the past, product upgrades have yielded bigger jumps in sales.
“For a while now, we’ve seen Apple take a step back from the iPhone and try to derive value from services,” said Brian Blau, a technology analyst with the research firm Gartner.
Over all, the company’s financial results for the quarter were an improvement from the year before, when it struggled with declining revenue. Apple posted revenue of $78.4 billion for the quarter, up 3 percent compared with the previous year. Profits actually fell slightly, to $17.9 billion, but the company used some of its $27 billion in cash flow in the quarter to buy back millions of shares, so earnings per share rose slightly.
Apple said it was seeing strong growth globally. In mainland China, sales were flat, after a long run of declines. Apple said its global revenue for the quarter was reduced by 1 percent because of the high value of the dollar. In some countries, Mr. Maestri said, Apple raised prices of its products by as much as 40 percent in local currency terms as the dollar rose.
Mr. Cook said that Apple was continuing to explore new services. “We have put our toe in the water with doing some original content for Apple Music,” he said. “We are learning from that.”
