Press Stories: Apple stock plummets on discouraging iPhone sales projection

Title: Apple Beats Earnings Estimates, but Faces Sales Decline in China

Apple, the tech giant, has reported its fiscal first-quarter earnings, exceeding revenue and earnings expectations. However, the company witnessed a significant 13% decline in sales in China, one of its vital markets. As a result, Apple’s shares dropped by over 4% in extended trading, following a negative outlook provided by management for the current quarter, indicating potential weakness in iPhone sales.

For the quarter ending December 30th, Apple’s earnings per share stood at $2.18, outperforming the anticipated $2.10. Furthermore, the company’s revenue reached a staggering $119.58 billion, surpassing expectations of $117.91 billion. While iPhone revenue amounted to $69.70 billion, exceeding the expected $67.82 billion, Mac revenue slightly exceeded expectations at $7.78 billion. However, iPad revenue fell short, reaching $7.02 billion instead of the expected $7.33 billion. Other Products revenue also surpassed expectations, totaling $11.95 billion compared to the anticipated $11.56 billion. On the other hand, Services revenue reached $23.12 billion, slightly lower than the $23.35 billion expected by analysts.

The company reported a gross margin of 45.9%, surpassing the anticipated 45.3%. However, Apple did not provide any guidance for the current quarter ending in March. Apple’s CFO, Luca Maestri, mentioned that iPhone sales for this quarter are predicted to be similar to the previous year’s $51.33 billion, when adjusted for supply outperformance due to Covid-related shutdowns. Additionally, Apple’s total company revenue, excluding $5 billion in iPhone sales, is projected to be similar to last year’s $94.84 billion.

While services are expected to maintain an 11% growth rate, similar to the December quarter, Apple’s gross margin continues to rise, reaching nearly 46% in the same period. Net income for the quarter reached $33.92 billion, showing a significant 13% increase from the same period last year. Apple’s CEO, Tim Cook, attributed the growth acceleration in this quarter to the difference in the number of weeks compared to the previous one.

Despite these positive developments, iPhone sales grew by only 6% to $69.70 billion, slightly below revised market expectations. The services business rose by 11% to reach $23.11 billion, but it fell slightly short of estimates. Apple attributed this growth to various factors like advertising, cloud services, payments, and the App Store.

The decline in sales in China, particularly around 13%, may be attributed to increasing competition from local firms, notably Huawei. Apple’s services growth, however, continues to demonstrate resilience across all regions except Greater China.

Overall, Apple’s fiscal first-quarter earnings report reflects strong performance, with impressive revenue and earnings exceeding expectations. However, close attention needs to be paid towards China’s declining sales and the potential challenges this may pose for the company moving forward.

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