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Apple iPhone sales inch up, supporting earnings despite weak economy

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Customers line at the Apple Fifth Avenue shop for the launching of the Apple iPhone 14 series in Manhattan, New York City, U.S., September 16, 2022. REUTERS/Andrew Kelly/File Photo

May 4 (Reuters) - Apple Inc's (AAPL.O) earnings surpassed expectations on Thursday, showing off the tech giant's durability in a slowing global economy due to better-than-expected iPhone sales and substantial advances in India and other fresh countries.

Shares of the top U.S. firm by market value gained 2% after Apple beat Wall Street's estimates for sales and earnings for the April 1 quarter. The company's results contrast with dismal data out of global chipmakers owing to a slower-than-expected resurgence in China's economic development.

Apple executives on Thursday indicated gross profit margins for the upcoming quarter will be stronger than predicted despite an expected decrease in sales as supply-chain concerns had eased.

Apple said revenue for its fiscal second quarter ended April 1 decreased 2.5% to $94.8 billion, ahead of estimates for a 4.4% fall, according to Refinitiv data. Profit remained steady at $1.52 per share, compared with projections of $1.43 per share.

IPhone sales were up 1.5% to $51.3 billion, besting estimates for a 3.3% dip even as individuals and corporations tightened back spending owing to increasing inflation. Global smartphone sales declined 13% during the first three months of 2023, according to research company Canalys, which claimed Apple gained market share versus Android competitors.

Chief Financial Officer Luca Maestri predicted Apple's gross margin would be between 44% and 44.5%, surpassing predictions of 43.7%, according to Refinitiv data. But he also suggested Apple's sales would likely decrease marginally. Analysts were anticipating a 2.1% rise to $84.7 billion for the company's June-ending fiscal third quarter.

Apple's stock has outpaced much of Wall Street in 2023, up 28% year-to-date. Investors regard the firm as a defensive investment at a period of economic instability.

Apple upped its dividend to 24 cents a share, up from 23 cents a share a year earlier. The board adopted a $90 billion share buyback program, same as a year earlier.


Apple CEO Tim Cook told Reuters in an interview on Thursday that the firm established a fiscal second-quarter record for iPhone sales, owing in part to signing up new customers in areas such as India, where Cook just toured for the inauguration of that country's first Apple shops.

"We were thrilled by our performance in emerging markets," Cook added. "We set records for the iPhone installed base in every geographic segment, and we had very strong 'new to' (sales in) emerging markets, particularly in Brazil, India and Mexico."

Cook also stated supply-chain snarls had dissipated. "We had no material shortages at all during the quarter across any of the products."

Not all of Apple's business divisions were immune to the electronics slowdown. Sales of Macs fell dramatically while iPad revenue dipped. Sales in China also decreased 2.9%, a somewhat greater reduction than global sales.

"Apple still needs China on a near-term basis to drive sales and profits," said Tom Forte of D.A. Davidson. "Long-term, emerging markets are important, especially India from a supply chain and sales standpoint."

Other IT businesses have forecast a second-half comeback. Wall Street expects Apple to rebound quicker and exhibit slight year-over-year sales increase during its fiscal third quarter ending in June.

Investors are still waiting for the company's next significant hardware offering. Bloomberg has suggested the iPhone manufacturer might introduce a mixed-reality headgear as soon as next month, when it conducts its annual software developer conference. The corporation has introduced additional service companies such as a high-yield savings account.

Mac sales plummeted more than 30% compared with analyst projections of a 25% fall, according to Refinitiv. Apple's sales performed only marginally better than PC unit shipments in the market, which plunged 33% in the calendar first quarter, according to Canalys.

Sales in Apple's wearables sector, which includes items like AirPods and the Apple Watch, decreased less than 1% compared with projections for a 4.4% dip.

Apple's strongest growth category was its services division, which includes items like iCloud and Apple Pay, which rose 5.5% to $20.9 billion. Cook said Apple now has 975 million members on its platform, which includes both Apple services and third-party applications, up from 935 million last quarter and a gain of 150 million from a year earlier.

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