Nov 2 (Portal) – Apple (AAPL.O) on Thursday gave holiday quarter sales forecast that fell short of Wall Street expectations due to weak demand for iPads and wearables, sending shares down about 3% in after-hours trading .
Chief Executive Tim Cook stressed that the company’s new iPhone 15 models were performing well in China, seeking to ease Wall Street’s concerns that Apple would lose market share to resurgent Huawei and other local smartphone sellers. Apple’s sales in China fell 2.5% overall in its fiscal fourth quarter ended Sept. 30, although Cook said it rose after accounting for foreign exchange rates.
Chief Financial Officer Luca Maestri told analysts in a conference call that sales in the current quarter, which includes the Christmas holidays and when Apple typically sees its biggest sales of new iPhone models, will be similar to last year. Wall Street had expected sales to rise 4.97% to $122.98 billion.
Apple shares, which have risen 37% so far this year, fell 3.4% in after-hours trading, in line with forecasts.
Maestri said Apple expects higher iPhone sales in its fiscal first quarter, even though this year’s holiday quarter has one week less sales than last year.
“I would say it was surprising to see how confident Tim Cook was about China’s future development, given the many potential geopolitical challenges we know exist for this market,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
Apple on Thursday reported fiscal fourth-quarter revenue and profit that beat Wall Street expectations, helped by a rise in iPhone sales and a $1 billion jump in services revenue, which offset big declines in Mac and iPad sales. could compensate for sales.
Cook said the company’s new high-end phone models – the iPhone 15 Pro and Pro Max devices – are facing supply shortages.
The Cupertino, California-based company has weathered a global smartphone slump better than many of its rivals but faces an uneven economic recovery in China, a key market.
“While we think investors should breathe a sigh of relief as both sales and earnings beat expectations, upside potential was limited and we were concerned about weak sales from China,” said DA Davidson analyst Tom Forte.
Apple said revenue fell about 1% to $89.50 billion in its most recent quarter, but beat analyst estimates of $89.28 billion, according to LSEG data. Net income rose about 11%. According to LSEG, earnings per share of $1.46 beat analyst expectations of $1.39 per share.
[1/5]People stand in front of an Apple Store as Apple’s new iPhone 15 officially goes on sale across China on September 22, 2023 in Shanghai, China. Portal/Aly Song acquires license rights
Apple faces tougher competition in the smartphone market this year as Huawei Technologies (HWT.UL) returns to the market with new phones with chips made in China after several years of being virtually hobbled by U.S. government trade restrictions was excluded from the market.
Apple’s sales in China fell to $15.08 billion from $15.47 billion in the fourth quarter of last year. Cook said Apple’s business in China grew year-on-year, accounting for foreign exchange rates, driven by iPhone sales and service revenue.
“In mainland China, we set a quarterly record for iPhone in September,” Cook told Portal. “We had four of the five best-selling smartphones in urban China.”
Cook said Apple is “working hard to make more” iPhone 15 Pro and Pro Max devices. “We believe we will reach balance between supply and demand later this quarter.”
The iPhone remains Apple’s biggest seller for the time being. Fourth-quarter revenue was $43.81 billion, in line with analyst expectations, according to LSEG data.
“We expect Apple’s first fiscal quarter performance to continue to improve as delivery issues for the top-of-the-line Pro and Pro Max models will be resolved by then,” said IDC analyst Nabila Popal. “Demand across all regions continues to show a preference for the highest quality models, and we expect the share of these models to be even greater this year than last year,” she said.
The PC market is also expected to develop better in the coming year. Earlier this week, Apple launched new Mac devices.
Still, Mac sales fell by a third to $7.61 billion and iPad sales fell 10% to $6.44 billion, compared with expectations of $8.63 billion and $6, respectively .07 billion US dollars.
Sales in Apple’s wearables segment, which includes the Apple Watch and AirPods, fell 3% to $9.32 billion, falling short of estimates of $9.43 billion, according to LSEG data back.
Apple has faced declining sales of Macs and iPads in several quarters, and that trend continued in the fourth quarter.
Revenue from Apple’s services segment, which includes Apple TV+ and which recently signed a deal with global soccer superstar Lionel Messi, rose 16% to $22.31 billion, compared with analyst estimates of $21.35 billion U.S. dollar.
Reporting by Stephen Nellis in San Francisco and Yuvraj Malik in Bengaluru. Editing by Sayantani Ghosh, Peter Henderson, Matthew Lewis and Leslie Adler
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