Apple posts first quarterly revenue drop since 2016 amid weak iPhone sales over holiday season

Apple reported its first quarterly revenue decline in nearly four years on Thursday after pandemic-imposed restrictions on its Chinese factories slashed sales of the latest iPhone over the holiday season.

The company’s sales of $117 billion (approximately Rs. 9,61,775 crore) for the October-December period represented a 5% drop from the same period a year earlier, a deeper drop than not analysts predicted.

It’s Apple’s first year-over-year quarterly revenue decline since the January-March period in 2019, when sales also fell 5% amid weaker demand for iPhone and the fallout from a trade war with China waged by then-President Donald Trump. .

Apple’s profits also eroded in the last quarter, even as the Cupertino, California-based company remained a pillar of prosperity. Profits totaled $30 billion (about Rs. 2,46,609 crore), or $1.88 per share (about Rs. 150), a decrease of 13 from the same period a year earlier. These results also missed the target of $1.94 per share (about 160 rupees) set by analysts polled by FactSet Research.

Investors reacted to the disappointment by initially driving Apple stock down nearly 5% in Thursday’s extended trading session. But management’s remarks on a conference call with analysts raised hopes that Apple’s disappointing performance was just a setback, trimming the company’s share decline to less than 1. %.

Apple’s rare stumble came amid renewed investor optimism about the tech’s prospects this year, helping to spur a 17% rise in the sector’s Nasdaq composite index so far this year. year.

But now Wall Street looks likely to reassess things in light of Apple’s latest earnings report and lingering worries about a potential recession following interest rate hikes aimed at taming inflation, the report said. Investing.com analyst Jesse Cohen.

While Google also revealed a year-over-year quarterly decline in digital ad sales on Thursday alongside Apple’s disappointing performance, Cohen said it was clear there were “several challenges that the tech sector is facing in the current economic climate of slowing growth and high inflation.”

Despite the quarterly downturn in its fortunes, Apple has signaled no intention of resorting to mass layoffs – a stark contrast to its tech peers. Industry giants Alphabet, Microsoft, Amazon and Meta Platoforms have announced plans to lay off more than 50,000 employees combined as they adjust to slowdowns or revenue declines caused by less reliance on people to the digital realm as the pandemic subsided.

“We are managing for the long term,” Apple CEO Tim Cook told analysts on the conference call. “We invest in innovation and people.”

Cook had tried to prepare investors for a tougher sledge in late October when he warned of “increasingly difficult economic conditions” as the festive season approached. Then, a few days later, Apple warned that China’s attempts to curb the spread of COVID were affecting its production lines and preventing it from meeting all the demand for premium iPhone 14 models over the holidays.

This contributed to an 8% drop in iPhone sales from a year earlier to $65.8 billion (about Rs. 5,40,709 crore) in the latest quarter.

Cook said Apple’s supply issues are now over, assuring analysts that “production is now back to where we want it to be.”

In another positive sign, Apple also revealed that it now has more than 2 billion iPhones, iPads, Macs and other devices in active first-time use. This will likely help Apple sell more digital subscriptions and ads, helping to fuel long-term revenue growth.