Apple’s iPhone business is bracing itself against the slack in the smartphone market – but overall group sales have fallen for the second quarter in a row. The main triggers were declines in the sale of Mac computers and iPad tablets. Apple also pointed out that sales would have increased slightly if exchange rates had remained the same.
The iPhone business increased by 1.5 percent to $51.33 billion, as Apple announced after the US stock market closed on Thursday. It was an all-time high for the second quarter, which ended in March – despite the unfavorable exchange rates.
In the Christmas quarter, sales of the more expensive and 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. Just how much that drove sales is difficult to quantify, said Apple boss Tim Cook in a conference call with analysts. Industry-wide smartphone sales had meanwhile fallen by around 15 percent according to calculations by market researchers.
Sales of Mac computers fell by a good 31 percent to $7.17 billion. The business was slowed down, among other things, by the weak economy. However, Apple also pointed out that the market launch of Mac models with chips developed in-house had given sales a strong boost in the past quarter.
Computer sales had recently shrunk significantly after the boom at the beginning of the corona pandemic. According to calculations by the market research company IDC, PC sales fell by 29 percent across the industry in the past quarter. Apple was particularly hard hit with a drop of a good 40 percent to 4.1 million.
iPad sales also fell sharply, while the services business hit a record, up 5.5 percent to $20.9 billion. 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.
Overall, sales in the second fiscal quarter fell by three percent to 94.8 billion dollars (86 billion euros) by the end of March. The bottom line was a profit of 24.15 billion dollars, after around 25 billion dollars in the previous year.
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.
In view of the current hype about software based on artificial intelligence such as the chatbot ChatGPT, Cook was also asked about Apple’s strategy in this area. His answer was that while Apple saw “interesting potential” in AI applications, they would continue to weave them into their own products “very carefully”. At the same time, Cook emphasized that the group already uses artificial intelligence for functions such as the detection of falls in its computer clock.
Goldman raises price target for Apple
The US investment bank Goldman Sachs has raised the price target for Apple from 200 to 209 US dollars and left the rating on “buy”. Apple had a strong quarter and met expectations for earnings, capital distributions and the outlook, analyst Michael Ng wrote in a study available on Friday.
Jefferies gives Apple a ‘Buy’ rating
Analyst firm Jeffries has given Apple a “buy” rating based on the numbers, with a target price of $195. The technology group had a robust quarter despite the increasingly difficult economic environment, analyst Andrew Uerkwitz wrote in a study available on Friday. Few things in the marketplace are as certain as the iPhone maker’s ability to generate cash, the resilience of the company’s products, and the remarkably positive sentiment among Apple customers.
Going against the trend with iPhones: Apple asked for quarterly figures
Surprisingly strong quarterly figures gave Apple significant price gains before the market on Friday. Several analysts spoke of a strong start to the year and confirmed their buy recommendations.
After a pre-market rise in the share on the NASDAQ to $170.44, an increase of 2.5 percent to $169.83 was later recorded. This would scratch the paper in regular trading at the most recent interim high – on Wednesday it had reached $ 170.92, its highest level since last August. The record mark of $182.94 set at the beginning of 2022 is also not too far away.
With the price increase of almost 28 percent since the beginning of the year, Apple can show the second best development in the leading US index Dow Jones Industrial – only the software manufacturer Salesforce has an even better balance sheet in 2023. And in the technology-heavy NASDAQ 100, the share is also one of the better values for this period.
Even based on Thursday’s close, Apple’s market cap is around $2.6 trillion, making Apple the frontrunner in the exclusive club of trillion-dollar companies. The software giant Microsoft brings almost 2.3 trillion dollars to the stock market scales and the Google parent company Alphabet and the online retailer Amazon 1.3 and around one trillion dollars, respectively.
Apple’s sales fell three percent for the second quarter in a row, but still exceeded analysts’ expectations. The main support was the slight plus with the iPhone, which analyst David Vogt from Bank UBS was positively surprised about. In addition, the service business reached a record level, which also helped cushion the sharp decline in Mac computers and iPads. The company also pointed out that group revenues would have increased slightly if exchange rates had remained the same. Earnings per share also surprised positively.
Apple has once again surprised positively with its resilience in a difficult market environment, praised JPMorgan analyst Samik Chatterjee.
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