The iPhone remains Apple’s profit maker. Bucking the industry trend, demand for the new model has increased. The US group’s subscription business is also flourishing and has reached a record level.
In view of iPhone sales increasing again, Apple can at least partially escape the weakening global economy. Overall, the US group posted the second decline in quarterly sales in a row. Revenues fell 3 percent to $94.8 billion in the second fiscal quarter.
Nevertheless, the figures were received with relief by investors, because the decline was only a little more than half as high as experts had feared. The bottom line for Apple was a profit of $24.15 billion, after around $25 billion in the previous year.
pent-up demand
Revenues from iPhones even grew surprisingly by 1.5 percent to $51.33 billion. “We’re seeing record numbers of iPhones in use across all geographies,” said CEO Tim Cook. Demand has increased particularly strongly in emerging countries such as Brazil, India and Mexico.
Apple is thus bucking the industry trend, because industry-wide smartphone sales have fallen by around 15 percent, according to market researchers.
The reason for the special boom: In the Christmas quarter, sales of the more expensive and for the manufacturer more lucrative iPhone 14 Pro were slowed down by corona lockdowns in Chinese factories. As a result, there was a pent-up demand in the past quarter. Exactly how much this has driven sales is difficult to quantify, Cook said.
The services business reached a record value with an increase of 5.5 percent to 20.9 billion dollars. The number of subscriptions for various services such as Apple Music or Fitness recently reached 975 million – an increase of 40 million within three months.
Sales of Mac computers plummet
Other segments, on the other hand, did not fare as well. Sales of Mac computers fell by a good 31 percent to $7.17 billion. Computer sales had recently shrunk significantly after the boom at the beginning of the corona pandemic.
The minus was only slightly better than for the PC industry as a whole. According to analysis firm Canalys, it was 33 percent. A recovery is not in sight for the time being. In the current year, global sales of PCs are expected to fall by 12 percent and smartphones by 5.5 percent before picking up again in 2024, forecast the consulting firm Gartner. iPad sales also fell significantly.
problems in China
Demand from China was also disappointing in the past quarter. Here sales shrank by an above-average 2.9 percent to 17.8 billion dollars. “Apple will need China as a growth and profit driver for the foreseeable future,” said analyst Tom Forte from research house DA Davidson. “In the long term, the emerging markets are important.” This applies above all to India as a production location and sales market.
Apple shares rose about 2.5 percent in after-hours trading. Group sales in the past quarter exceeded analysts’ expectations. For the current quarter, Apple is once again preparing for headwinds from unfavorable exchange rates. At the same time, the group raised the dividend and promised further share buybacks of 90 billion dollars.