Apple on Thursday fell in extended trade after missing forecasts for revenue, profit, and sales across many of its business segments.
The holiday quarter saw a 5% decrease in Apple’s overall sales compared to the prior year, the company’s first year-over-year sales fall since 2019.
The results were hampered, according to Apple CEO Tim Cook, by three factors: a strong dollar, production problems with the iPhone 14 Pro and iPhone 14 Pro Max in China, and the general macroeconomic climate.
“On the third factor, I would say was just the challenging macroeconomic environment, and you’re hearing that from, I would think, everybody,” Cook told CNBC’s Steve Kovach.
Apple Share Decline
During Thursday’s extended trading, Cupertino shares briefly fell by more than 4% before recovering as the tech giant revealed information regarding the outlook for the current quarter.
According to the company’s analytics, iPhone sales won’t fall off as quickly as they did during the holiday quarter.
Here’s how Apple did versus Refinitiv consensus expectations:
- EPS: $1.88 vs. $1.94 estimated, down 10.9% year over year
- Revenue: $117.15 billion vs. $121.10 billion estimated, down 5.49% year over year
- iPhone revenue: $65.78 billion vs. $68.29 billion estimated, down 8.17% year over year
- Mac revenue: $7.74 billion vs. $9.63 billion estimated, down 28.66% year over year
- iPad revenue: $9.4 billion vs. $7.76 billion estimated, up 29.66% year over year
- Other Products revenue: $13.48 billion vs. $15.23 billion estimated, down 8.3% year over year
- Services revenue: $20.77 billion vs. $20.67 billion estimated, up 6.4% year over year
- Gross margin: 42.96% vs. 42.95% estimated
Apple didn’t offer any forecasts for the current quarter, which ends in March. Since 2020, it hasn’t given advice, first blaming the pandemic’s uncertainty for the lack of clarity.
Analysts anticipated that the business will forecast second-quarter sales of roughly $98 billion.
Apple did provide some information about performance expectations, though. The revenue trend for the March quarter, according to Chief Financial Officer Luca Maestri, will be comparable to that of the December quarter.
Services are anticipated to expand, while Mac and iPad sales are predicted to drop by double digits from the same period last year, according to Maestri.
Apple also stated that iPhone sales will drop less in the March quarter compared to the December quarter.
Apple’s shocking profit failure in the quarter was its first against consensus estimates in over seven years.
In reality, sales came in more than 3% below consensus projections, making it the company’s second revenue shortfall since August 2017.
It also signaled a step back from Apple’s two-year triumph, which was fueled by consumers’ need for new computers so they could work and attend school from home.
It was Apple’s first quarterly sales fall year over year since 2019 and the largest quarterly revenue decline annually since September 2016.
Report Source: Company Reports
Apple CEO Tim Cook told CNBC that a strong currency was a contributing factor in the miss.
According to him, Apple expanded in the majority of markets after accounting for foreign exchange headwinds of 800 basis points. 0.01 of a percentage point is equivalent to one basis point.
Cook also mentioned that there were less phones available to sell to customers because the supply of the iPhone 14 Pro and iPhone 14 Max was drastically reduced throughout the quarter.
Covid lockdowns during the quarter had an impact on the main iPhone assembly factory in China, as had been warned to investors in November.
“We put out an update on that on November 6th and it lasted through most of December,” Cook said “So we had a big hole there.”
The CEO of Apple claimed that manufacturing has now returned to levels that are acceptable to the company.
To read our blog on “Apple will release a 2023 MacBook Pro with longest battery life,” click here.
