Written by Stephen Nellis
(Reuters) – Apple on Thursday reported sales in China that fell short of Wall Street’s targets, overshadowing overall sales and profits that were buoyed by iPhone growth and exceeded analysts’ targets.
Apple’s chief financial officer, Luca Maestri, suggested that revenue for the current quarter will be lower than a year ago, when the company benefited from a roughly $5 billion increase in sales post-COVID-19.
He told analysts on a conference call that, excluding last year’s increase, total sales and iPhone sales for the quarter ending in March will be similar to the same period last year.
According to LSEG data, Wall Street was targeting revenue of just under $96 billion, a modest increase from a year ago, while Apple’s forecast was for about $90 billion, $5 billion below last year’s figure. There is.
Apple shares fell 3% in after-hours trading.
The company’s overall fiscal first quarter sales rose 2%, marking the fourth straight quarter of sales declines due to strong performance from the iPhone 15 lineup, which includes a device that can capture 3D video for the Vision Pro headset, which goes on sale this week. It put an end to it. Apple’s total installed base of devices reached 2.2 billion, up from 2 billion the previous year.
Apple CEO Tim Cook said in an interview with Reuters, “We certainly liked the 6% (sales growth) for the iPhone.” “iPhone had particularly strong double-digit growth in emerging markets outside of China. iPhone is doing well in these markets.”
He added: “China is the most competitive smartphone market in the world and that hasn’t changed.”
Cook told Reuters that while the company’s iPhone installed base in China was at an all-time high, iPhone sales in mainland China were down “mid-single digits” in the quarter, accounting for exchange rates. Ta.
Apple had revenue of $119.58 billion and earnings per share of $2.18 for the fiscal first quarter ended Dec. 30, compared with analysts’ expectations of $117.91 billion, per share, according to LSEG data. It was reported that the price exceeded $2.10 per month.
iPhone sales rose 6% to $69.7 billion, beating analysts’ expectations of $67.82 billion, according to LSEG data.
Two other tech giants, Amazon.com Inc. and Facebook owner Meta Platforms, reported quarterly results on Thursday, sending their stock prices soaring.
Apple’s results were seen as more mixed.
Analyst Bob O’Donnell said: “While the overall strong sales of the iPhone 15 clearly reflects stronger-than-expected pent-up demand for smartphones, the major failure in China is concerning. It could be the beginning.” At Technalysis Research.
Microsoft overtook Apple in January to become the world’s most valuable company, but investors saw Apple as falling behind in the artificial intelligence race among Wall Street’s tech giants.
Apple has said it is researching generative AI, but is instead focusing on its Vision Pro headset, which analysts don’t expect to bring in meaningful revenue for several years.
In the short term, analysts are increasingly concerned about sales of Apple’s flagship devices in China, where the economy is weathering the bursting of a real estate bubble. The iPhone also faces increased competition in China, where it has become unpopular with government agencies.
Apple reported sales in China of $20.82 billion, lower than analysts’ expectations of $23.53 billion, according to LSEG data.
Counterpoint Research said China’s iPhones in the quarter were on the rise, as Chinese consumers looked to domestic rival Huawei, which re-entered the market with novel foldable phones and flagship phones powered by Chinese-made chips. It was reported that the number of units shipped decreased.
In the rest of Asia, excluding China and Japan, Apple’s revenue reached $10.16 billion, beating analysts’ expectations of $9.75 billion, according to LSEG data. Cook said iPhone sales in South Korea, home to Apple’s longtime rival Samsung Electronics, hit a record high.
Apple’s biggest growth area in the fiscal first quarter was its services business, which includes the Apple TV+ service, music, iCloud storage and the App Store, where revenue rose 11% to $23.12 billion. However, the result was slightly below the $23.35 billion expected by analysts, according to LSEG data.
DA Davidson analyst Gil Luria said: “The critical services business was slightly below expectations, which is probably the item of most concern to investors as this line of business continues to be the most important driver of growth. I guess so.” he commented.
Apple’s App Store is also facing challenges in Europe, where a new law that takes effect in March will allow developers to avoid paying fees to Apple and set up an alternative app store on the iPhone.
Apple’s first-quarter Mac sales rose slightly to $7.78 billion, matching analysts’ expectations of $7.73 billion, according to LSEG data. iPad sales fell 25% to $7.02 billion, below expectations of $7.33 billion, according to LSEG data.
Apple’s wearables division, which includes sales of AirPods and the Apple Watch, fell to $11.95 billion after company executives warned of weak demand. Results were slightly above expectations of $11.56 billion, according to LSEG data.
Several Apple Watch models have been at the center of a legal dispute with medical device maker Masimo, before Apple removed blood oxygen monitoring features to comply with the legal ruling and continue selling the devices. , temporarily removed from shelves.
(Reporting by Stephen Nellis in San Francisco; Additional reporting by Arsheeya Singh Bajwa and Yuvraj Malik in Bengaluru; Additional reporting by Max A. Cherney and Peter Henderson in San Francisco; Editing by Sayantani Ghosh and Matthew Lewis)