In this way, the group can remain highly profitable even if it sells fewer iPhones and iPads. Apple’s consolidated revenue fell 1.4 percent year-on-year to $81.8 billion. Bottom line, however, profits rose to around $19.9 billion from $19.44 billion a year earlier.
With the iPhone, Apple’s most important product by far, revenue in the past quarter fell by 2.4 percent to $39.67 billion. On average, analysts had expected slightly higher proceeds of $40 billion. Industry-wide smartphone sales fell by eight percent according to calculations by the analysis company IDC – and Apple closed the gap to Samsung with a stable market share of 16 percent.
At the beginning of the year, iPhone sales were still being driven by pent-up demand. In the Christmas quarter, corona lockdowns in Chinese factories caused bottlenecks for the more expensive and lucrative iPhone 14 Pro. The electronics business is being held back by high interest rates and inflation, among other things.
Meanwhile, the services business, which includes revenue from the App Store and services such as Apple Music, grew by a good eight percent to a record $21.2 billion. Apple broke the one billion paid subscription mark last quarter.
For the current quarter, Apple expects accelerated growth in the iPhone and in the service business. With Mac computers and iPads, on the other hand, there will be significant declines. However, the comparison is distorted by particularly high sales in the same quarter of the previous year – a consequence of pent-up demand after corona failures.
In the conference call after the quarterly figures were presented, analysts from CEO Tim Cook wanted to learn more about Apple’s plans for artificial intelligence. He again referred to features like fall detection that work with AI and machine learning. At the same time, Cook also said that Apple has been studying so-called generative AI for years, which can create content such as text or images. Programs such as the chatbot ChatGPT or automatic image generators have triggered an AI hype in recent months, in which Apple has not yet made an appearance.
He uses the glasses presented by Apple in early June to display digital content every day, said Cook. The device, called Vision Pro, is scheduled to hit the US market early next year.
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Revenue from Mac computers fell from $7.4 billion to $6.8 billion last quarter. PC sales are currently still weak after the boom at the beginning of the corona pandemic. Industry-wide, sales fell by 16.6 percent in the last quarter, according to figures from the market research company Gartner. iPad sales fell from $7.2 billion to $5.8 billion.
UBS maintains Apple target price of $190
The major Swiss bank UBS has left Apple’s rating at “Neutral” with a target price of $190. Overall, the results of the third business quarter were as expected, with positive and negative aspects, analyst David Vogt wrote in his first reaction on Thursday evening. Signals from management in the final quarter are therefore more important for further price development.
Apple disappoints investors with revenue development of its products
Declining iPhone and PC sales startled Apple investors on Friday. Having jumped to a record high of just under $200 in mid-July, the IT giant’s stock came under pressure in early trading. Apple shares were ultimately 4.8 percent lower at $181.99 in trading on the US NASDAQ stock exchange.
Nevertheless, Apple is still one of the “darlings” of investors in the current year. After a mixed run in 2022, things have been rising steadily since the beginning of 2023 – with only a small, brief setback in February. There is currently an increase of a little more than 42 percent. Only the software manufacturer Salesforce has increased even more strongly in the Dow.
Investors reacted coldly to the mixed figures for the third business quarter. According to JPMorgan analyst Samik Chatterjee, this quarter “didn’t look much different than the previous quarters, which investors should have become accustomed to by now.” In this context, Chatterjee referred in particular to the moderate quarterly growth of the IT group on the basis of constant exchange rates.
While the reference to a slightly weaker-than-previously-expected guidance for the final quarter, including a forecast of a slight decline in sales year-on-year, may have pissed some investors off, he says it’s “quite minor.” All in all, nothing changes in the overall development, Chatterjee wrote. Apple expects modest sales growth on a constant currency basis despite the uncertainties surrounding the overall economic environment and the difficult comparative figures from the previous year for Macs and iPads.
Bank of America analyst Wamsi Mohan had already feared that investors’ expectations for the past quarter could be too high. Before that, he had warned the day before that the numbers would be announced. Now he emphasized positively that the growth in the service sector has made up for the weak sales of Apple products. As a result, the past quarter was ultimately as expected in terms of revenue, while profitability was better. Regarding the outlook for the current final quarter, he wrote: “This includes improved growth in services and iPhone, while iPads and Macs remain weak.”
CUPERTINO (dpa-AFX) /
ZURICH (dpa-AFX Broker)
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