Friday, February 3, 2023

Apple experiences its first quarterly sales decline in nearly four years

Apple suffers 1st quarterly sales decline in nearly 4 years

 CAPE CANAVERAL: Apple reported its first quarterly revenue decline in nearly four years on Thursday as a result of restrictions imposed by the pandemic on its factories in China that slowed sales of the most recent iPhone during the holiday season.

Compared to the same time last year, the company's sales of $117 billion in October and December were down 5%, which was more than analysts had anticipated.

It is Apple's first quarterly revenue decline year over year since January to March of 2019, when sales also fell 5% due to slowing iPhone demand and the effects of a trade war waged by then-President Donald Trump with China.

Despite the fact that the Cupertino, California-based company remained a pillar of prosperity, Apple's profit also decreased during the previous quarter. In comparison to the same time last year, earnings totaled $30 billion, or $1.88 per share. This represents a 13 decrease. Additionally, those outcomes fell short of the $1.94 per share target set by FactSet Research-surveyed analysts.

In response to the disappointment, investors initially drove Apple's stock down by nearly 5% during extended trading on Thursday. However, comments made by management on a conference call with analysts raised hopes that Apple's poor performance was just a hiccup, reducing the share price decline to less than 1%.

Despite Apple's rare stumble, the sector's bellwether Nasdaq composite index has increased 17% so far this year due to renewed investor optimism regarding the sector's outlook for this year.

However, according to analyst Jesse Cohen, in light of Apple's most recent results and ongoing concerns about a potential recession as a result of rising interest rates aimed at reducing inflation, Wall Street now appears likely to reevaluate the situation.

Cohen stated that it is evident that there are "several challenges the tech sector faces amid the current economic climate of slowing growth and elevated inflation" with Google revealing on Thursday a year-over-year quarterly decline in its digital ad sales along with Apple's disappointing performance.

despite the decline in its fortunes over the past quarter. In stark contrast to its rivals in the technology industry, Apple has not indicated any intention to employ a large number of layoffs. As the pandemic has eased, industry giants Alphabet, Microsoft, Amazon, and Meta Platforms have announced plans to lay off more than 50,000 employees as they adjust to revenue slowdowns or downturns brought on by people's decreasing reliance on the digital realm.

During the conference call, Apple CEO Tim Cook stated to analysts, "We manage for the long term." We put money into people and innovation."

In late October, when he warned of "increasingly difficult economic conditions" heading into the holiday season, Cook had attempted to prepare investors for harder times. Then, just a few days later, Apple issued a warning that China's efforts to stop the spread of COVID were affecting its production lines and would prevent it from meeting all holiday demand for the premium iPhone 14 models.

As a result, iPhone sales decreased 8 percent in the most recent quarter, reaching $65.8 billion.

Cook assured analysts that "production is now back where we want it to be," indicating that Apple's supply issues are now resolved.

Apple also revealed that for the first time, it now has more than 2 billion iPhones, iPads, Macs, and other devices in active use, which is another encouraging sign. Apple's long-term revenue growth will likely be fueled by increased sales of digital subscriptions and advertisements as a result.

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