Dear clients,
Apple on Thursday predicted that its sales slump would continue into the current quarter, sending its stock tumbling despite beating Wall Street forecasts for sales and earnings in its fiscal third quarter.
Apple shares fell about 2% after the company predicted that the sales decline could be the fourth consecutive quarter of decline. Profit growth in the period was led by higher services sales, but lower-than-expected sales of Apple’s best-known device, the iPhone, did not satisfy investors. Company executives said iPhone sales would improve in the fourth quarter, but didn’t say by how much.
Apple is in a tricky position: its entrenched iPhone is fighting for share with Android rivals in a mature market, and its next big product, the Vision Pro mixed-reality headset announced in June, has yet to get into the hands of consumers.
Apple said sales in its fiscal third quarter ended July 1 fell 1.4% to $81.8 bln and earnings per share rose 5% to $1.26. That exceeded analysts‘ expectations of $81.69 bln and $1.19 per share, according to Refinitiv’s IBES data. Weak iPhone sales were balanced by strong sales in the services segment, which includes Apple TV+, as well as sales in China, which grew 8% year-over-year.
At the same time, Apple managed to outperform the weakest smartphone market in China in a decade. According to Counterpoint Research, total smartphone sales in China fell 8% in the second calendar quarter, hitting the lowest level since 2014. Apple CEO Tim Cook, on the other hand, said that iPhone sales in China had „doubled“ and that sales in other segments in China were also strong.
This helped Apple boost sales in the Greater China region to $15.76 bln, up from $14.60 bln in the same quarter last year.
According to Refinitiv, iPhone sales totalled $39.67 bln, below analysts‘ expectations of $39.91 bln. Cook said the number of iPhone units reached a new high, but did not provide any figures.
