Oct 27 (Portal) – Apple Inc (AAPL.O) on Thursday reported revenue and profits beating Wall Street’s targets, one of the few bright spots in a tech sector battered by inflation-driven spending cuts.
The forecast for the holiday quarter was bleaker. Though Apple didn’t provide specific numbers, Apple said its revenue growth would fall below 8% in the December quarter, but didn’t go as far as Amazon.com AMZN.O, whose dismal holiday outlook sent its shares down 14%.
Apple shares initially plummeted in after-hours trading but bounced back into positive territory.
The Cupertino, California-based tech giant was rescued by its oldest technology, its laptops, while its star, the iPhone, stumbled.
While iPhone sales weren’t as strong as some analysts had envisioned, they were still a record for the September quarter. Mac sales of $11.5 billion far exceeded analyst estimates of $9.36 billion.
Apple’s results showed some resilience in the face of a weak economy and a strong US dollar, which has led to disastrous reports from many tech companies. Like Facebook parent Meta (META.O) and Snap (SNAP.N), Apple sees weakness in ad spending. Overall, Apple said quarterly revenue was up 8% to $90.1 billion, ahead of estimates of $88.9 billion, and net income came in at $1.29 per share, up topping the median analyst estimate of $1.27 per share, according to data from Refinitiv.
“We performed better than we expected, even though exchange rates were significantly negative for us,” said Chief Financial Officer Luca Maestri.
The rising US dollar has hit many companies like Apple, which generate significant overseas revenue and get less money back when they exchange it. For consumers, the price of new devices increases when they are purchased in countries outside of the United States.
According to Refinitiv IBES, Apple’s iPhone sales rose to $42.6 billion in the company’s fourth quarter, while Wall Street was expecting sales of $43.21 billion.
According to Maestri, iPhone sales in the September quarter hit a record, up 10% from the year-ago quarter and beating the company’s guidance.
“The iPhone number is an indication of the turmoil and uncertainty in the market, but Apple has several ways to offset that,” said Runar Bjorhovde, research analyst at market research firm Canalys.
Sales of Apple’s Mac computers got a boost with the launch of the redesigned MacBook Air and MacBook Pro laptops this summer. New tablets went on sale this week.
Apple said its 43.3% gross margin was a record for the September quarter.
According to Maestri, the robust computer sales also reflect a backlog of orders caused by an extended shutdown of one of the factories that makes Macs, which Apple was able to fill in the quarter.
The company reported iPad sales of $7.2 billion, compared to the median estimate of $7.94 billion.
Apple wearables like AirPods and other accessories brought in $9.7 billion in sales, slightly above Wall Street’s forecast of $9.2 billion.
“They said they didn’t have any particular issues with the offer, so that seems to be a thing of the past,” said Carolina Milanesi, consumer analyst at Creative Strategies.
Growth in the company’s services business, which has propelled sales and profits in recent years, saw revenue climb to $19.2 billion, down from the $20.10 billion estimate.
Maestri said Apple, like others in the industry, has seen weakness in digital advertising and games.
“Like other big tech companies, Apple is suffering the negative impact of a deteriorating macroeconomic backdrop and ongoing supply chain issues, although it has done better at navigating the challenging environment,” said Jesse Cohen, senior analyst at Investing.com.
In China, which has been experiencing a severe economic downturn, Apple reported fourth-quarter revenue of $15.5 billion. That’s up from the previous quarter, when Apple reported revenue of $14.6 billion.
Apple said it now has 900 million paid subscribers to its services, up from 860 million in the previous quarter.
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Reporting by Dawn Chmielewski in Los Angeles and Nivedita Balu in Bengaluru; Editing by Peter Henderson and Lisa Shumaker
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