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Apple Inc. posted its worst holiday performance in four years as supply issues and a weakening economy harmed iPhone sales, exposing flaws in one of technology’s most resilient corporations.
In the December quarter, Apple’s biggest sales period of the year, revenue dipped 5.5% to $117.2 billion, falling far short of the average Wall Street projection of $121.1 billion. It was Apple’s first quarterly decrease since 2019 and the company’s first failed holiday sales predictions since 2015.
Following the announcement, the stock dropped as much as 5.6% in late trading, however it recovered part of its losses as Chief Executive Officer Tim Cook highlighted a resurgence in China, which is emerging from stringent Covid-19 controls. He also stated that Apple’s production issues had been resolved.
Last quarter, Apple’s iPhone and Mac were particularly dismal, pulled down by a larger decline in mobile devices and computers. The Covid limits in China exacerbated Apple’s problems, making it more difficult to supply enough of the most popular iPhone models. Another difficulty was timing: the business didn’t release new Macs and HomePods until recently, missing the end of the Christmas quarter.
“The world continues to face unprecedented circumstances — from inflation to war in Eastern Europe to the enduring impacts of the pandemic — and we know that Apple is not immune to it,” Cook said on a conference call. “But whatever conditions we face, our approach is always the same. We are thoughtful and deliberate.”
During the fiscal first quarter, which ended Dec. 31, earnings per share were $1.88. This compares to a consensus forecast of $1.94 per share.
The Cupertino, California-based technology behemoth did not issue a comprehensive estimate for the second quarter, sticking to the strategy it used when the epidemic began in 2020, but it did set out certain expectations.
Apple stated that its performance in the March quarter will be similar to that of the first. That means a 5% drop in sales compared to $97.3 billion the previous year might be in the cards. On the plus side, the business stated that iPhone revenue will increase in the March quarter and that services revenue would increase. The iPad and Mac, on the other hand, are expected to fall.
In New York, Apple shares finished up 3.7% at $150.82. This year, they have increased by 16%.
Apple earned $65.8 billion from the iPhone during the quarter, falling short of the projection of $68.3 billion. This is also a decrease from the $71.6 billion earned by the product the previous year.
While the current iPhone represented a substantial improvement over the previous generation, plants in China making the popular Pro versions were closed for weeks throughout the quarter owing to pandemic restrictions.
The Mac cost the corporation $7.74 billion, significantly less than the $9.7 billion predicted. This is also a considerable decrease from the previous year’s figure of $10.9 billion.
It was a difficult year-over-year comparison because Apple released a refreshed MacBook Pro range during the previous holiday season. This time, the MacBook Pro and Mac mini models were not updated until the current quarter.
The wearables, home, and accessories sector pulled in $13.5 billion, which includes the Apple Watch, HomePod speakers, Apple TV, AirPods, and Beats goods. This was less than the $15.3 billion predicted by Wall Street. The division’s revenues were also down from last year’s $14.7 billion.
Other parts of the country fared better. The iPad made $9.4 billion, above the $7.8 billion expectation. In October, Apple released minor iPad Pro improvements as well as a redesigned entry-level device. This resulted in increase following a poorer iPad quarter a year before.
Services earned $20.8 billion, topping expectations of $20.5 billion and increasing from $19.5 billion the previous year. A price increase aided. Apple Music costs $1 more each month, and Apple TV+ costs $2 more. The App Store, AppleCare customer care and repairs, and services like as Arcade and News+ are also included in this category.
Chief Financial Officer Luca Maestri stated that the company’s services revenue was a record amount and that it raised its overall revenues while maintaining currency constant.
Cook also stated that Apple will continue to improve its supply chain.
“The last three years have been a pretty difficult time, between Covid and silicon shortages and the like,” he said. “I think we have had a very resilient supply chain.”
