Apple’s iPhone bounces back from slump, helping sales top estimates
Written by Mark Gorman
Apple Inc.’s iPhone sales rebounded. last quarter, helping the world’s most valuable company achieve top earnings estimates and weather an industry-wide downturn that hurt much of its product portfolio.
Apple said Thursday that revenue totaled $94.8 billion in its fiscal second quarter, exceeding the $92.6 billion expected by analysts. Although sales fell 2.5% in the period, the company has warned investors to expect a drop of nearly twice that.
The results indicate that Apple is starting to recover from the slump that hit both the computer and smartphone industries. It’s a particular relief for investors after Qualcomm Inc, a major supplier, raised new concerns about phone demand earlier this week. Apple’s sales in China — a weakness for other tech companies — came in slightly better than expected.
As expected, Apple announced plans to buy back shares worth $90 billion — the same plan as last year. The company also raised its quarterly dividend by 4%, to 24 cents a share.
Shares rose 2% in late trade after the report was released. It closed at $165.79, up 28% for the year.
Although it performed better than expected, it posted two consecutive quarters of sales declines — the first for Apple since the pandemic began. Earnings, meanwhile, were unchanged from a year earlier at $1.52 per share. That compared to an average estimate of $1.43 per share.
In a conference call with analysts, Apple said that revenue in the current period will decline by a similar amount as in the previous quarter, which ended on April 1. This indicates a decrease of about 3%. The company also said that it will continue to see a negative impact from foreign exchange rates.
Apple generated $51.3 billion in sales of the iPhone — its flagship product — in the second quarter, beating analysts’ expectations of $49 billion. Chief Executive Officer Tim Cook said that was only up 1.5% from a year ago but represented record performance for the March quarter. In the statement, he said the increase came “despite a difficult macroeconomic environment.”
Like many tech CEOs who report earnings, Cook also discussed artificial intelligence. He said it has huge potential and that Apple will continue to weave it into products in a “very thoughtful” way.
From a supply perspective, the second quarter was an opportunity for iPhone 14 to bounce back. The device suffered from limitations during the previous period due to Covid policies in China.
 "Graph")
Graph
iPad saw revenue drop 13% to $6.67 billion, roughly in line with estimates of $6.7 billion. The new models, which included a new entry-level version and Pro models with the M2 chipset, did little to spur buying in the quarter.
Similarly, revenue in the Mac division fell 31% to $7.17 billion. This followed expectations of $7.7 billion. Research firms have already warned that this was a bleak quarter for the group, with IDC estimating that Mac shipments fell about 40% in the quarter. Apple updated the MacBook Pro and Mac mini, adding faster processors, but failed to reignite unit sales.
The Home Appliances, Wearables & Accessories division, which includes AirPods, Apple Watch and set-top box – fell less than 1% to $8.76 billion. This exceeded estimates of $8.5 billion. The company added a faster processor to the Apple TV during the quarter, and updated the HomePod speaker during the March quarter.
The services business, which includes iCloud, Apple Music, the App Store and TV + Streaming, earned $20.91 billion, missing estimates of $21.1 billion. However, it was a 5.5% gain over the previous year. In the most recent quarter, Apple promised to accelerate — along with the iPhone — services revenue.
The company did particularly well in emerging markets, Cook said, pointing to record quarterly sales in Mexico, Indonesia, the Philippines, Saudi Arabia, Turkey and the United Arab Emirates. He said the company’s overall sales would have risen if it had kept the currencies steady.
For Apple and other US companies with a global footprint, the strong dollar has depressed the value of revenue generated in other parts of the world.
“Despite these challenges, we continue to manage for the long term,” Cook said.