On Thursday, Apple Inc. reported an increase in its quarterly sales and profit, surpassing the predictions made by Wall Street analysts. A 2.8% increase in iPhone sales, matching the expectations of Wall Street, mitigated the significant decline in Mac and iPad sales.
Despite the global smartphone market slump, Apple, headquartered in Cupertino, California, has managed to stay afloat better than most of its competitors. However, it is grappling with an unpredictable economic resurgence in China, a crucial market for the tech giant.
For the fiscal fourth quarter ending on September 30, Apple reported that sales had decreased by roughly 1% to $89.50 billion. Nevertheless, the company generated nearly $1 billion more in services revenue than anticipated by Wall Street, pushing the overall total beyond the analysts’ prediction of $89.28 billion based on LSEG data. There was also a surge of about 11% in net income. The per-share profit of $1.46 exceeded the analyst expectation of $1.39, according to LSEG data.
Apple’s shares have seen an upward trend this year, with a 37% increase so far. On Thursday, the company’s shares closed 2% higher but fell by 1.3% in post-bell trading, after the publishing of the results.
The current results, however, do not reflect the majority of sales from Apple’s latest iPhone 15 models. The competition in the smartphone market has intensified this year, particularly with Huawei Technologies resurfacing with new phones powered by Chinese-made chips, after a few years of absence due to the restrictions imposed by the U.S. government.
Apple’s sales in China experienced a 2.5% decline, falling to $15.08 billion from $15.47 billion in the fourth quarter of the previous year. CEO Tim Cook stated that after adjusting for foreign exchange rates, the company’s business in China saw an annual growth, fuelled by iPhone sales and services revenue.
Cook also revealed that two of Apple’s latest high-end models, the iPhone 15 Pro and Pro Max, are currently facing supply constraints. He expressed optimism that the supply-demand equilibrium would be achieved later this quarter.
Several global trends are working in Apple’s favour, with predictions hinting at a potential recovery of the smartphone market by 2024. The personal computer market is also expected to perform better in the upcoming year. Apple rolled out its new Mac machines earlier this week.
In the long term, investors are curious about how Apple will respond to the surge in generative artificial intelligence, a technology that has attracted massive investments from Microsoft and Alphabet’s Google. Apple is also working on this technology, aiming to enhance its broad range of products.
As of now, iPhone remains Apple’s biggest revenue generator. The device’s sales amounted to $43.81 billion in the fourth quarter, matching the analyst expectations based on LSEG data.
Sales in Apple’s wearables segment, which includes the Apple Watch and AirPods, dipped by 3% to $9.32 billion, below the estimated $9.43 billion. The sales of Macs and iPads, which have been declining for several quarters, continued to drop in the fourth quarter as well. Mac sales fell by a third to $7.61 billion, and iPad sales decreased by 10% to $6.44 billion.
On a brighter note, the services segment of Apple, which includes Apple TV+ and recently signed a deal with football superstar Lionel Messi, witnessed a 16% rise in sales to $22.31 billion, surpassing the $21.35 billion estimate made by analysts.
