Apple’s revenue and profit rise slightly despite slowing economy

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Apple managed to boost both sales and earnings in a summer quarter that depressed the fortunes of most other big tech companies, but that doesn’t necessarily mean the iPhone maker will be down. sheltered from a possible recession.

Even though Apple has done reasonably well, July-September results released Thursday indicated that the world’s most valuable company is facing some of the same economic headwinds that have hammered earnings at Microsoft and parent companies. from Google and Facebook.

Apple’s fiscal fourth quarter revenue increased 8% from the same period last year to $90.1 billion. That’s an improvement from the weak 2% increase in revenue in its April-June quarter, when supply issues caused by pandemic-related plant shutdowns hurt its sales.

The Cupertino, California-based company’s earnings for the last quarter were $20.72 billion, or $1.29 per share, up less than 1% from the same period. last year.

Revenue and earnings per share were slightly above analysts’ estimates. But on the downside, sales of Apple’s most popular product, the iPhone, and another big money-maker, and services division, were both lower than analysts had expected. – a sign that consumers could cut back amid the highest inflation in 40 years.

Apple is facing “increasingly difficult economic conditions,” CEO Tim Cook said during a Thursday conference call with analysts. “A lot of people in a lot of places are struggling.”

These challenges are one of the reasons why Apple expects revenue growth to slow in the current October-December period, even though this year’s quarter will be a week longer than the previous one. last year, warned Apple’s chief financial officer, Luca Maestri, during a conference call. The strength of the US dollar, which has lowered Apple’s reported sales internationally, is also contributing to the expected slowdown.

Investors initially reacted negatively after Maestri made the prediction, sending Apple shares down around 3% in extended trading, but seemed to be feeling more optimistic about the company’s prospects as the market crashed. management concluded the conference call. Apple shares rose more than 1% Thursday night. Mirroring other once high-flying tech stocks, Apple’s stock has fallen another nearly 20% so far in 2022.

The iPhone – still Apple’s flagship product 15 years after its debut – accounted for most of its success in the last quarter, even though the company hasn’t sold as many devices as analysts had expected. hoped. Boosted by the release of four new models in late September, iPhone sales soared 10% from the same period last year to $42.63 billion.

But industry analysts are starting to worry about how long consumers will splurge on new phones as they feel the pinch from last year’s stubbornly high inflation rates. If these financial pressures persist, it could cause more households to cut spending this holiday shopping season, especially on the kind of pricey gadgets that are Apple’s lifeblood.

This is one of the main reasons why research firm International Data Corp. now expects global smartphone shipments to fall 6.5% this year from 2021, a downward revision of a full three percentage points – translating to around 150 million fewer devices sold – compared to a precedent. forecast made in May.

Apple won’t suffer as much as makers of phones running Google’s Android operating system, IDC predicted, but it will still cause a significant slowdown. IDC predicts that iPhone shipments will increase by less than 0.5%, with the device’s average selling price hovering around $950. In the first nine months of this year, iPhone sales increased by 6% compared to last year.

“We knew Apple’s iPhone business was slowing down, but we’re also starting to see that trickle down to their services segment, which will be a cause for concern,” Investing.com analyst Jesse Cohen said.

Maestri told analysts that declining advertising and game sales were the main drag on the services division in the last quarter.

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