Apple reported Thursday its first quarter revenue decline in almost four years, following pandemic-driven restrictions placed on China’s factories that halted sales of its latest iPhones during the holidays season.
The company’s sales of $117 billion for the October-December period represented a 5% decline from the same time in the previous year, a deeper downturn than analysts had projected.
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It marks Apple’s first year-over-year decrease in quarterly revenue since the January-March period in 2019 when sales also slipped 5% 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. The earnings totalled $30 billion or $1.88 per shares, which is 13 less than the prior year. These results were also below the $1.94 target set by FactSet Research analysts.
Investors reacted to the letdown by initially driving down Apple’s stock by nearly 5% 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 1%.
Apple’s rare stumble came against a backdrop of renewed investor optimism about tech’s outlook for this year, helping to spur a 17% 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’s clear there are “several challenges the tech sector faces amid the current economic climate of slowing growth and elevated inflation.”
Even with the quarter-end downturn, Apple continues to be profitable. Apple hasn’t signaled any intention to resort to mass layoffs — a stark contrast to its peers in technology. Industry giants Alphabet, Microsoft, Amazon and Meta Platoforms 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,”During the conference call, Tim Cook, Apple CEO, spoke to analysts. “We invest in innovation and people.”
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Cook warned investors in late October that he was trying to prepare them for harder times. “increasingly difficult economic conditions”Heading into the holiday season. Then, just a few days later, Apple cautioned that China’s attempts to clamp down on the spread of COVID was affecting its production lines and would prevent meeting all the demand for the premium iPhone 14 models during the holidays.
This contributed to an 8 percent decrease in iPhone sales compared to the prior year, which was $65.8billion in the latest quarter.
Cook indicated Apple’s supply headaches are now over, assuring analysts that “production is now back where we want it to be.”
Apple revealed that more than 2 million iPhones, iPads, Macs, and other devices are now in active use. This is a positive signal. Apple is expected to increase its sales of digital ads and subscriptions to boost long-term revenue growth.
This article was written by The Associated Press.
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