December 1, 2022

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Apple profits soar as economic gloom affects technology

Apple profits soar as economic gloom affects technology

Oct 27 (Reuters) – Apple Inc (AAPL.O) On Thursday, it announced revenue and earnings that topped Wall Street’s goals, one of the few bright spots in the technology sector hurt by spending cuts due to inflation.

The outlook for the holiday quarter was more bleak. Although no specific numbers were provided, Apple said revenue growth would drop below 8% in the December quarter, but it did not reach Amazon.com AMZN.O, whose poor holiday forecast sent its shares down by 8%. 14%.

Apple shares initially declined in post-closing trading but recovered in positive territory.

The Cupertino, California-based tech giant was rescued by its oldest technology, laptops, while its star, the iPhone, stumbled.

Although iPhone sales weren’t as strong as some analysts were targeting, it was still a record high for the September quarter. Mac sales of $11.5 billion were far short of analyst estimates of $9.36 billion.

Apple’s results showed some resilience in the face of a weak economy and a strong US dollar that led to disastrous reports from many technology companies. Like Facebook Parent Meta (META.O) and Snap (SNAP.N), Apple sees a softer in ad spending. Overall, Apple said quarterly revenue rose 8% to $90.1 billion, above estimates of $88.9 billion, and net profit was $1.29 per share, beating analysts’ average estimate of $1.27 per share, according to data Refinitiv.

“We did better than we expected, despite the fact that the foreign exchange was a huge negative for us,” said Chief Financial Officer Luca Maestri.

The rise of the US dollar has hit many companies like Apple that generate significant foreign revenue and get less cash when transferred. For consumers, it increases the price of new devices when purchased in countries outside the United States.

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Apple’s iPhone sales for the company’s fiscal fourth quarter rose to $42.6 billion, when Wall Street expected $43.21 billion in sales, according to Refinitiv IBES.

Maestri said iPhone sales hit a record for the September quarter, improving 10% over the previous year’s quarter and exceeding the company’s expectations.

“The iPhone number is a signal of turmoil and uncertainty in the market, but Apple has different ways to compensate,” said Ronar Björhovede, research analyst at market research firm Canalys.

Apple’s Mac computer sales received a boost from this summer’s launch of the redesigned MacBook Air and MacBook Pro laptops. New tablets went on sale this week.

Apple said its gross margin of 43.3% was a record for the September quarter.

Maestri said the strong PC sales also reflected the backlog of orders, caused by the prolonged shutdown at one of the factories that produce Macs, which Apple was able to plug in the quarter.

The company reported that iPad sales were $7.2 billion, compared to an average estimate of $7.94 billion.

Apple wearables like AirPods and other accessories generated $9.7 billion in sales, slightly beating Wall Street forecasts of $9.2 billion.

“They said they don’t have a particular problem with the show, so that seems to be a thing of the past,” said Carolina Milanesi, consumer analyst at Creative Strategies.

Growth in the company’s services business, which has boosted sales and profits in recent years, saw revenue rise to $19.2 billion, below estimates of $20.10 billion.

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Maestri said Apple has seen a softer in digital advertising and gaming, as have others in the sector.

Jesse Cohen, chief analyst at Investing.com.

In China, which has experienced a sharp economic slowdown, Apple reported last quarter sales of $15.5 billion. That’s a gain from the previous quarter, when Apple reported $14.6 billion in sales.

Apple said it now has 900 million paid subscribers on its services, up from 860 million in the previous quarter.

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(Reporting by Dawn Chmielowski in Los Angeles and Nivedita Balu in Bengaluru; Editing by Peter Henderson and Lisa Shumaker

Our criteria: Thomson Reuters Trust Principles.