May 4 (Portal) – Apple Inc. (AAPL.O) results on Thursday beat expectations and showed the tech giant’s resilience in a slowing global economy thanks to better-than-expected iPhone sales and notable progress in India and other newer markets .
Shares of the largest U.S. company by market value rose 2% after Apple beat Wall Street’s revenue and earnings expectations for the April 1 quarter. The company’s results contrast with disappointing numbers from major chipmakers due to a slower-than-expected recovery in China’s economic growth.
Apple executives on Thursday said gross profit margins for the current quarter would be better than forecast despite an expected decline in sales due to improving supply chain issues.
According to data from Refinitiv, revenue for the fiscal second quarter ended April 1 fell 2.5% to $94.8 billion, beating expectations for a 4.4% decline. Earnings were flat at $1.52 per share compared to 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 due to rising inflation. According to research firm Canalys, global smartphone shipments fell 13% in the first three months of 2023, after which Apple was able to gain market share over Android rivals.
Chief Financial Officer Luca Maestri said Apple’s gross margin will be between 44% and 44.5%, according to Refinitiv data, ahead of estimates of 43.7%. But he also said that Apple’s revenue is likely to decline slightly. Analysts were expecting a 2.1% increase to $84.7 billion for the company’s fiscal third quarter ended June.
Apple stock has outperformed most of Wall Street in 2023, up 28% year-to-date. Investors view the company as a defensive company in times of economic uncertainty.
Apple increased its dividend to 24 cents a share, up from 23 cents a share a year ago. The board approved a $90 billion share repurchase program, as it did a year ago.
OUTSTANDING EMERGING COUNTRIES
Apple CEO Tim Cook told Portal in an interview on Thursday that the company set a record for iPhone sales in the second quarter, thanks in part to attracting new users in markets like India, where Cook recently headed to open the first in that country traveled to Apple stores.
Customers queue at the Apple Fifth Avenue store for the release of the Apple iPhone 14 range in Manhattan, New York City, the United States, September 16, 2022. Portal/Andrew Kelly/File Photo
“We have been delighted with our performance in emerging markets,” said Cook. “We’ve set records for the installed base of iPhones in every geographic segment, and we’ve had very strong ‘launches’ (sales in) emerging markets, particularly Brazil, India and Mexico.”
Cook also said the snarl had disappeared in the supply chain. “We did not experience material shortages on any of the products during the quarter.”
Not all of Apple’s businesses were immune to the electronics slump. Mac sales fell sharply while iPad revenue fell. Sales in China also declined 2.9%, a slightly larger decline than overall sales.
“Apple needs China in the near term to increase sales and profits,” said Tom Forte of DA Davidson. “In the longer term, emerging markets are important, especially India from a supply chain and distribution perspective.”
Other technology companies have predicted a recovery in the second half of the year. Wall Street expects Apple to recover faster in its fiscal third quarter, which ends in June, and post modest year-over-year revenue growth.
Investors are still waiting for the company’s next big hardware product. Bloomberg has reported that the iPhone maker could unveil a mixed reality headset as soon as next month when it holds its annual software developers conference. The company recently announced new service deals like a high-yield savings account.
According to Refinitiv, Mac sales fell more than 30% compared to analyst estimates of 25%. Apple’s sales only marginally outperformed shipments of PC units in the market, which fell 33% in the first calendar quarter, according to Canalys.
Revenue from Apple’s wearables business, which includes devices like AirPods and the Apple Watch, fell less than 1%, compared with a 4.4% decline.
Apple’s biggest growth segment was its services business, which includes products like iCloud and Apple Pay, which grew 5.5% to $20.9 billion. According to Cook, 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 up 150 million year-over-year.
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Reporting by Stephen Nellis in San Francisco and Yuvraj Malik in Bengaluru Editing by Peter Henderson and Matthew Lewis
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