Apple’s first reported revenue drop in four years adds to tech woes with Google also reporting a decline in sales
Apple posted its first quarterly revenue drop in nearly four years after pandemic-driven restrictions on its China factories curtailed sales of the latest iPhone .
The company’s sales of $117bn (£96bn) between October and December period were down five per cent on the same quarter the previous year, a deeper downturn than analysts had projected.
It marks Apple’s first year-over-year fall in quarterly revenue since January to March in 2019 when sales also slipped 5 per cent amid slowing iPhone demand and the fallout of a trade war with China that was being waged by then-President Donald Trump.
Apple’s profit also eroded during the past quarter, even though the Cupertino, California, company remained a pillar of prosperity.
Earnings totalled $30bn dollars (£25bn), or $1.88 per share; analysts polled by FactSet Research had set a target of $1.94 per share.
Investors reacted to the dip by driving down Apple’s stock by nearly five per cent in Thursday’s extended trading.
But management remarks made during a conference call with analysts raised hopes that Apple’s disappointing performance may have been a mere hiccup, paring the decrease in the company’s shares to less than one per cent.
Apple’s rare stumble came against a backdrop of renewed investor optimism about tech’s outlook for this year, helping to spur a 17 share increase in the sector’s bellwether Nasdaq composite index so far this year.
But now Wall Street seems likely to reassess things in light of Apple’s latest results and ongoing worries about a potential recession in the wake of rising interest rates aimed at tamping down inflation, said Investing.com analyst Jesse Cohen.
With Google also disclosing a year-over-year quarterly decline in its digital ad sales on Thursday alongside Apple’s disappointing performance, Cohen said it is clear there were, “several challenges the tech sector faces amid the current economic climate of slowing growth and elevated inflation”.
Despite the quarterly downturn in its fortunes. Apple has not signalled any intention to resort to mass layoffs — a stark contrast to its peers in technology.
Industry giants Alphabet, Microsoft, Amazon and Meta Platforms have announced plans to jettison more than a combined 50,000 employees as they adjust to revenue slowdowns or downturns caused by people’s lessening dependence on the digital realm as the pandemic has eased.
“We manage for the long term,” Apple CEO Tim Cook told analysts during the conference call. “We invest in innovation and people.”
Cook had also braced investors for a rougher ride in late October when he warned of “increasingly difficult economic conditions” heading into the festive season.
Then, just a few days later, Apple cautioned that China’s attempts to clamp down on the spread of Covid were affecting its production lines and would prevent meeting all the demand for the premium iPhone 14 models during the festive season.
That contributed to an 8% decrease in iPhone sales from the previous year to 65.8 billion dollars (£53.8 billion) in the most recent quarter.
Cook indicated Apple’s supply headaches are now over, assuring analysts that “production is now back where we want it to be”.
In another positive sign, Apple also disclosed that it now has more than two billion iPhones, iPads, Macs and other devices in active use for the first time. That is likely to help Apple sell more digital subscriptions and ads, helping to fuel long-term revenue growth.
Press Association – Associated Press Reporter
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