Apple’s results beat expectations on Thursday, showing the tech giant’s resilience in a slowing global economy, thanks to better-than-expected iPhone sales and notable forays into India and other newer markets.
Shares in the largest US company by market value rose 2 percent after Apple beat Wall Street’s revenue and profit expectations for the April 1 quarter. The company’s results contrast with disappointing numbers from major chip makers due to a slower-than-expected recovery in China’s economic growth.
Apple executives said on Thursday that gross profit margins for the current quarter would be better than forecast, despite an expected drop in revenue as supply chain issues eased.
Apple said sales for the fiscal second quarter ended April 1 fell by 2.5% to US$94.8 billion (about Rs.7,74,400 crore), above expectations for a 4.4% decline, according to Refinitiv data. Earnings were flat at $1.52 (approximately Rs. 120) per share, compared to estimates of $1.43 (approximately Rs. 115) per share.
iPhone sales rose by 1.5% to US$51.3 billion (approximately Rs.4,19,100 crore), beating expectations for a 3.3% decline even as consumers and businesses cut back on spending due to rising inflation. Global smartphone shipments are down 13% during the first three months of 2023, according to research firm Canalys, which said Apple gained market share against Android rivals.
Chief Financial Officer Luca Maestri said Apple’s gross margin will be between 44% and 44.5%, above estimates of 43.7%, according to Refinitiv data. But he also said that Apple’s revenue will likely decline slightly. Analysts had expected an increase of 2.1% to US$84.7 billion (approximately Rs.6,92,000 crore) for the company’s fiscal third quarter ended June.
Apple shares outperformed most of Wall Street in 2023, up 28% year-to-date. Investors see the company as a defensive play during a period of economic uncertainty.
Apple raised its dividend to 24 cents a share from 23 cents a year ago. The board authorized a $90 billion (about Rs.7,35,200 crore) share buyback program, the same as a year ago.
emerging markets outperform
Apple CEO Tim Cook told Reuters in an interview on Thursday that the company set a fiscal second-quarter iPhone sales record, thanks in part to winning new users in markets such as India, where Cook recently traveled to open the first Apple stores in that country.
“We were thrilled with our performance in emerging markets,” said Cook. “We’ve set records for the installed base of the iPhone in all geographic segments, and we’ve had very strong sales in emerging markets, particularly Brazil, India and Mexico.”
Cook also said that tangles in the supply chain have disappeared. “We didn’t experience any material shortages during the quarter on any of the products.”
Not all of Apple’s lines of business were immune to the electronics crisis. Mac sales have dropped dramatically, while iPad revenue has dropped. Sales in China were also down 2.9%, a slightly larger drop than overall revenue.
“Apple still needs China in the near term to boost sales and earnings,” said Tom Forte of DA Davidson. “Long-term emerging markets are important, especially India from a supply chain and sales perspective.”
Other tech companies predicted a second-half rebound. Wall Street expects Apple to recover faster and show modest year-over-year revenue growth during the fiscal third quarter ending in June.
Investors are still waiting for the company’s next big hardware product. Bloomberg reported that the iPhone maker could launch a mixed reality headset as early as next month when it holds its annual software developers conference. The company recently announced new service businesses, such as a high-yield savings account.
Mac sales are down more than 30 percent compared with analysts’ estimates of a 25 percent decline, according to Refinitiv. Apple’s sales were only marginally better than market PC sales, which fell 33 percent in the first quarter, according to Canalys.
Sales in Apple’s wearables business, which includes devices such as the AirPods and Apple Watch, fell less than 1 percent compared with estimates for a 4.4 percent decline.
Apple’s fastest growing segment was its services business, which includes products such as iCloud and Apple Pay, which grew by 5.5% to US$20.9 billion (approximately Rs.1,70,700 crore). Cook said Apple now has 975 million subscribers to its platform, which includes Apple services and third-party apps, up from 935 million in the last quarter and an increase of 150 million from a year earlier.
© Thomson Reuters 2023
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)