Apple’s revenue and profits fall as iPhone sales slow

Apple’s revenue and profits fall as iPhone sales slow

Apple's revenue and profits fall as iPhone sales slow

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When a Covid-19 outbreak in China forced Apple’s biggest iPhone factory into lockdown in November, the world’s most valuable company warned investors it would lose sales. The question was: How much?


On Thursday, Apple announced that its revenue fell 5% to $117.15 the three months ending in December, the company’s first quarterly sales decline since before the pandemic. Profits fell 13% to $30 billion.

Apple’s results are the latest evidence of the challenges rocking the tech industry.After posting double-digit sales gains at the start of the pandemic, companies have recently turned to cost-cutting and mass layoffs, with Microsoft, Amazon and Alphabet – Google’s parent company – each shedding at least 10,000 jobs.

A less severe whiplash hit Apple. From 2020 to 2022, the company has increased its annual revenue by nearly $125 billion. But demand for iPhones, iPads and Macs has slowed, causing investors to be wary of the company. Over the course of a year, Apple lost $1 trillion in market value, a staggering reversal for the only US company to ever reach a $3 trillion valuation.

Shares of the company fell about 4% in after-hours trading, reversing most of the early-day gains when tech stocks rallied after Meta’s earnings report on Wednesday. Wall Street had forecast $122 billion in sales and $31 billion in profit.

Although its business has slowed, Apple has not decided to cut jobs. Unlike some of its peers, such as Google and Meta, which hired aggressively in the early years of the pandemic to meet demand, Apple remained disciplined, adding 24,000 new workers, just 3,000 more. than in the three years leading up to 2020.

Still, many investors have cut their stake in Apple for fear that its business will be hit by the slowing economy. Consumer spending in the United States, Apple’s biggest market, has fallen, posing a potential challenge to sales of expensive iPhones.

“It’s impacting high-end consumers’ willingness to spend and it’s going to impact the world’s most valuable company,” said Dave Wagner, portfolio manager at Aptus Capital Advisors, which manages around $5 billion. dollars and invests in Apple.

Apple recorded $65.78 billion in iPhone sales, a8% decrease compared to the previous year. The modest decline is a testament to the company’s supply chain acumen. After the company closed its largest iPhone factory in November, it shifted some production to other factories, according to Counterpoint, a market research firm.

On the sales front, Apple took advantage of more iPhone buyers picking up its more expensive Pro models, boosting the average sale price by 9% to $936, according to Counterpoint.

Apple has made up for its struggles with the iPhone with increased sales of its iPads and services. The company said its iPad business recorded $9.4billion dollars in sales, an increase of 30%. It boosted sales of apps and subscription services such as Apple Music to $20.77 billion, about 6% from a year earlier.

The company’s biggest challenge remains its concentrated supply chain in China. The weakening of US-China relations has accelerated, with Congress this year creating a special committee to assess competition with Beijing. Concerns are also growing in Washington that China may soon take military action against Taiwan.

Amid rising tensions, Apple has moved production from China to Vietnam and India. But a large majority of its revenue continues to come from products made in China. And Chinese consumers account for about a fifth of total sales.

In the December period, sales in China fell 7% to $23.9 billion. Apple’s business there is expected to improve in the current period as China’s economy reopens after years of tight Covid-19 restrictions. Analysts predict that current quarter sales will decline about 4%.


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