Apple iPhone sales edge up, bolstering results amid faltering economy

May 4 (Reuters) – Earnings from Apple Inc (AAPL.O) beat expectations on Thursday, showing the tech giant’s resilience in a slowing global economy thanks to better-than-expected iPhone sales and notable breakthroughs in India and other newer markets.

Shares of the largest US company by market value rose 2% after Apple beat Wall Street expectations for revenue and profit for the April 1 quarter. The company’s results contrast with disappointing numbers from major chipmakers due to a slower-than-expected rebound in Chinese economic growth.

Apple executives said Thursday gross profit margins for the current quarter would be better than expected despite an expected drop in revenue as supply chain issues improved.

Apple said sales in its fiscal second quarter ended April 1 fell 2.5% to $94.8 billion, ahead of expectations of a 4.4% drop, Refinitiv data shows. . Earnings were flat at $1.52 per share, versus estimates of $1.43 per share.

iPhone sales rose 1.5% to $51.3 billion, beating expectations for a 3.3% decline even as consumers and businesses tightened spending on the rise of inflation. Global smartphone shipments fell 13% in the first three months of 2023, according to research firm Canalys, which said Apple had gained market share from its Android rivals.

Chief Financial Officer Luca Maestri said Apple’s gross margin would be between 44% and 44.5%, above estimates of 43.7%, according to Refinitiv data. But he also said Apple’s revenue would likely decline slightly. Analysts had expected a 2.1% increase to $84.7 billion for the company’s third fiscal quarter ending in June.

Apple stock has outperformed most of Wall Street in 2023, up 28% year-to-date. Investors see the company as a defensive play during a time of economic uncertainty.

Apple increased its dividend to 24 cents per share from 23 cents per share a year ago. The board authorized a $90 billion share buyback program, as it did a year ago.


Apple CEO Tim Cook told Reuters in an interview on Thursday that the company set a fiscal second-quarter record for iPhone sales, thanks in part to winning new users in markets such as Apple. India, where Cook recently visited for the opening of the country’s first store. Apple stores.

Customers line up at the Apple Fifth Avenue store for the release of the Apple iPhone 14 line in Manhattan, New York, U.S., September 16, 2022. REUTERS/Andrew Kelly/File Photo

“We were pleased with our performance in emerging markets,” Cook said. “We set records for the installed base of iPhones in all geographic segments, and we had very strong sales in emerging markets, particularly in Brazil, India and Mexico.”

Cook also said the supply chain grunts are gone. “We had no material shortages during the quarter for any of the products.”

Not all of Apple’s business sectors were immune to the electronics crisis. Mac sales fell sharply while iPad revenues fell. Sales in China also fell 2.9%, a slightly larger drop than overall revenue.

“Apple still needs China in the near term to boost sales and earnings,” said DA Davidson’s Tom Forte. “Long term, emerging markets are important, especially India from a supply chain and sales perspective.

Other tech companies predicted a rebound in the second half. Wall Street expects Apple to recover faster and post modest year-over-year revenue growth in its third fiscal quarter ending in June.

Investors are still waiting for the company’s next major hardware product. Bloomberg reported that the iPhone maker could unveil a mixed reality headset as early as next month at its annual software developer conference. The company recently announced new service activities such as a high-yield savings account.

Mac sales fell more than 30% from analysts’ estimates of a 25% decline, according to Refinitiv. Apple’s sales did only marginally better than market PC unit shipments, which fell 33% in the first calendar quarter, according to Canalys.

Sales of Apple’s wearables business, which includes devices like the AirPods and Apple Watch, fell less than 1% from estimates of a 4.4% drop.

Apple’s biggest growth segment was its services business, which includes products like iCloud and Apple Pay, which rose 5.5% to $20.9 billion. Cook said Apple now has 975 million subscribers on its platform, which includes both Apple services and third-party apps, up from 935 million last quarter and an increase of 150 million from a year ago. a year.

Reuters Charts

Reporting by Stephen Nellis in San Francisco and Yuvraj Malik in Bengaluru Editing by Peter Henderson and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Leave a Comment