Apple on Thursday posted its first quarterly sales decline in nearly four years after pandemic-related restrictions at its factories in China restricted sales of the latest iPhone during the holiday season.
The company’s revenue of US$117 billion (about Rs.9,61.77 billion) for the period October-December represented a 5 percent decline from the same time last year, a deeper decline than analysts had forecast .
It marks apples the first year-over-year decline in quarterly sales since the January-March 2019 period, when sales also fell 5 percent due to the slowdown iPhone Demand and the aftermath of a trade war with China waged by then-President Donald Trump.
Apple’s profit also slumped last quarter, although the Cupertino, California-based company remained a pillar of prosperity. Revenues totaled US$30 billion (about Rs.2,46,609 crore) or US$1.88 per share (about Rs.150), down 13 from the same time last year. Those results also missed a target of $1.94 per share (about Rs. 160) set by analysts polled by FactSet Research.
Investors reacted to the disappointment by initially taking Apple shares nearly 5 percent lower in extended trading on Thursday. But management’s comments during a conference call with analysts raised hopes that Apple’s disappointing performance may have been just a hiccup, reducing the company’s share decline to less than 1 percent.
Apple’s rare stumble came amid renewed investor optimism about tech’s prospects for this year, which helped push the sector’s benchmark index, the Nasdaq Composite Index, up 17 percent so far this year.
But now Wall Street appears to be reassessing things given Apple’s recent results and ongoing concerns about a potential recession amid rising interest rates aimed at curbing inflation, said Jesse Cohen, an analyst at Investing.com.
As Google also announced a quarterly year-over-year decline in its digital ad sales alongside Apple’s disappointing performance on Thursday, Cohen said it’s clear “the technology sector faces multiple challenges given the current economic climate of slowing growth and elevated inflation.”
Despite the quarterly downturn, Apple has signaled no intention to resort to mass layoffs — a stark contrast to its tech peers. giants of the industry alphabet, Microsoft, Amazon And meta platforms have announced plans to lay off more than 50,000 employees combined as they adjust to revenue declines or declines caused by people’s waning reliance on digital as the pandemic abates.
“We’re taking a long-term view,” Apple CEO Tim Cook told analysts during the earnings call. “We invest in innovation and people.”
Cook had tried to prepare investors for a harder ride in late October when he warned of “increasingly difficult economic conditions” heading into the holiday season. Then, just days later, Apple warned that China’s attempts to stem the spread of COVID would disrupt its production lines and prevent it from meeting all of the demand for the bounty iPhone 14 models on vacation.
This contributed to an 8 percent year-on-year decline in iPhone sales to US$65.8 billion (approximately Rs.5,40,709 billion) in the latest quarter.
Cook pointed out that Apple’s supply shortages are now over, reassuring analysts that “production is now back where we want it to be.”
In another positive sign, Apple also announced that it now has more than 2 billion iPhones, iPads, Macs and other devices in active use for the first time. That will likely help Apple sell more digital subscriptions and ads, which will help fuel long-term revenue growth.
