Apple on Thursday gave a sales forecast for the vacation quarter that missed Wall Street expectations, hurt by weak demand for iPads and wearables, sending its shares down 3.5% in after-hours trading.
Chief Executive Tim Cook insisted that the corporate’s latest iPhone 15 models were doing well in China, citing a record September quarter for iPhones in the region and in search of to ease Wall Street worries that Apple was losing market share to a resurgent Huawei and other local smartphone sellers.
On a conference call with analysts, Chief Financial Officer Luca Maestri said sales for the present quarter, when Apple typically has its biggest sales of latest iPhone models, will likely be just like the previous 12 months. Wall Street was expecting a forecast for sales to rise 4.97% to $122.98 billion.
Apple shares, which have risen 37% thus far this 12 months, dropped 3.5% after-hours when the corporate gave the forecast.
Earlier on Thursday, Apple reported quarterly sales and profit beat Wall Street expectations, helped by an uptick in iPhone sales and a $1 billion boost to services revenue that offset large drops in Mac and iPad sales.
But revenue from China dipped 2.5% and Cook said the corporate’s latest high-end handset models – the iPhone 15 Pro and Pro Max devices – are facing supply constraints.
The Cupertino, California, company has navigated a worldwide smartphone slump higher than a lot of its rivals but faces an uneven economic recovery in China, a key marketplace for Apple.
“While we imagine investors should breathe a sigh of relief because sales and profits each exceeded expectations, the upside was small and we were concerned to see weak sales from China,” DA Davidson analyst Tom Forte said.
Apple said sales for the fiscal fourth quarter ended Sept. 30 fell roughly 1% to $89.50 billion but beat analyst estimates of $89.28 billion, in accordance with LSEG data. Net income rose about 11%. Profit per share of $1.46 beat analyst expectations of $1.39 per share, in accordance with LSEG.
Apple is facing tougher competition in the smartphone market this 12 months as Huawei Technologies L returns to the sphere with latest phones powered by Chinese-made chips after being all but shut out of the marketplace for several years by US government trade curbs.
Apple’s sales in China fell to $15.08 billion from $15.47 billion in the fourth quarter a 12 months ago. Apple’s Cook said that after accounting for foreign exchange rates, Apple’s business in China grew year-over-year, driven by iPhone sales and services revenue.
“In mainland China, we set a quarterly record for the September quarter for iPhone,” Cook told Reuters. “We had 4 out of the highest five best-selling smartphones in urban China.”
Cook said Apple was “working hard to fabricate more” iPhone 15 Pro and Pro Max devices. “We do imagine that later this quarter, we’ll reach a supply-demand balance,” he said.
Several global trends are also playing in Apple’s favor, with forecasters predicting that the smartphone market has bottomed out and should begin to get better in 2024.
In the long term, investors are eying how Apple responds to the boom in generative artificial intelligence in which systems can follow prompts in human-like ways – an area that has attracted billions in spending by Microsoft and Alphabet’s Google. Apple has said it’s working on the technology and views it as a method to improve a wide selection of products.
For now, the iPhone stays Apple’s biggest seller. Sales of the device were $43.81 billion in the fourth quarter, in line with analyst expectations of $43.81 billion, in accordance with LSEG data.
The laptop computer market can be expected to fare higher in the approaching 12 months. Earlier this week, Apple rolled out latest Mac machines.
Still, Mac sales slumped by a 3rd to $7.61 billion and iPad sales declined 10% to $6.44 billion, compared with expectations of $8.63 billion and $6.07 billion, respectively.
Sales in Apple’s wearables segment, which incorporates the Apple Watch and AirPods, fell 3% to $9.32 billion, in need of estimates of $9.43 billion, in accordance with LSEG data.
Apple has faced several quarters of declining sales of Macs and iPads, and the fourth quarter continued that trend.
Sales in Apple’s services segment, which incorporates Apple TV+ and which recently closed a cope with global soccer superstar Lionel Messi, rose 16% to $22.31 billion, compared with analyst estimates of $21.35 billion.