Apple officially introduced its incoming CEO John Ternus to the public on Thursday.
“We have an incredible roadmap ahead of us,” Mr. Ternus said on a call with analysts and investors after the company announced quarterly financial results.
The remarks were Mr. Ternus’s first public comments since he was named Apple’s next chief executive last week. The 50-year-old, who was most recently Apple’s head of hardware engineering, spoke for just over a minute on the call, adding that he plans to continue the financial discipline that defined the tenure of his immediate predecessor, Tim Cook.
“This is the most exciting time in my 25-year career at Apple building products and services,” said Mr. Ternus.
In a long-awaited move, Mr. Cook, 65, Apple’s chief executive since 2011, said on April 20 that he would step down and become the company’s executive chairman in September. Interacting with investors will be just one of the new responsibilities for Mr. Ternus, who has been an engineer in Silicon Valley his entire adult life.
“This is the right moment for the transition,” Mr. Cook said on Thursday’s investor call, pointing to Apple’s business and product line. “The most important thing is that we have the right leader ready to step into the role.”
Mr Cook added that, as executive chairman, he would support Mr Ternus “in any way he needs and in any way I can” and that they would work “to ensure that this transition is perfectly smooth”.
The changing of the guards is costly for Apple. The company continues to enjoy the popularity of its redesigned iPhones, which debuted in September, even as other consumer electronics companies struggle with a global shortage of memory chips.
Apple said Thursday that revenue for the three months ended in March rose 17 percent from a year earlier to $111.2 billion. Profit jumped 19 percent to $29.6 billion, surpassing its record for a quarter set in 2022.
Last year, Apple introduced new designs for the iPhone: a thin model called the iPhone Air and an iPhone Pro model with a raised bump across the back for the cameras. He also raised the prices of some iPhones by $100. Those changes boosted iPhone sales, which rose 22 percent to $57 billion.
The new designs also helped Apple bounce back from years of weak sales in China, the world’s largest smartphone market. In the first three months of the year, Apple’s sales in China rose by 28 percent to $20.5 billion.
Apple’s results exceeded expectations. Wall Street analysts had forecast quarterly revenue of $109.46 billion and profit of $28.52 billion.
The company also forecast strong sales in the current quarter and announced a change in its investment strategy. Instead of returning as much cash as possible to shareholders by buying back shares and paying dividends, Apple starts holding cash. The change could mean further investment in its business, including in areas such as artificial intelligence. Apple shares rose as much as 4 percent in after-hours trading.
“Apple continues to slightly beat expectations,” said Daniel Newman, chief executive of Futurum Group, a technology analysis firm. “It’s clear that the phone is a franchise and will continue to do well.”
But Mr. Newman added that the rise of artificial intelligence has made the long-term question even more pressing for Apple: “Is there some format, some product in the future that will come and displace the phone?”
Apple has largely stayed out of the AI scrum after last year’s stumbles. While its peers are spending hundreds of billions of dollars to develop and operate the technology, Apple has been slow to introduce AI features and partnered with other companies such as Google. In January, Apple said it would use Google’s Gemini AI models to power its AI products, including its Siri personal assistant.
“We believe AI is a really important investment area for Apple,” said Kevan Parekh, Apple’s chief financial officer, during a call Thursday. “We will be doing this incrementally, in addition to what we normally invest in our product roadmap.”
AI complicates parts of Apple’s business. Memory chips have become rarer and more expensive in recent months due to increased demand from AI chipmakers such as Nvidia and Advanced Micro Devices. So far, the shortage is not meaningfully cutting into Apple’s margins. But in the current and future quarters, Mr. Cook said, the company expects “significantly higher” memory chip costs.
“They have size and scale, and nobody is dismissive of Apple,” said Stephanie Link, chief investment strategist at asset manager Hightower Advisors. “The problem is that there just aren’t enough of them,” she added, referring to the memory chips.
Apple’s services revenue rose 16 percent to $31 billion in the first three months of the year. The company saw more modest growth in sales of Macs, iPads and wearables that include the Apple Watch and AirPods.
