Apple Buoys Wall Street, Keeping Doubts on Future Growth at Bay | Tech News

Apple Buoys Wall Street, Keeping Doubts on Future Growth at Bay

Apple is beginning to recover from a slump that’s plagued both the computer and smartphone industries.

| Updated on: May 07 2023, 07:28 IST
Apple Safari emerges as 2nd most-used browser after Google Chrome; check top 5
1/5 As per a recent Statcounter report, Safari has regained its position as the second most preferred web browser globally.  (Pexels)
2/5 Presently, 11.87 percent of desktop users use Safari on a regular basis, while Microsoft Edge slips to the third position with a market share of 11 percent. (Microsoft )
3/5 On the other hand, Google Chrome remains undefeated as the top desktop browser globally, with a significant market share of 66.13 percent.  (Unsplash)
image caption
4/5 Firefox and Opera have secured the 4th and 5th spot in the top 5 with 5.65 percent and 3.09 percent share respectively.  (Unsplash)
5/5 In the mobile realm, Chrome remains the reigning champion with a significant market share of 61.96 percent with Apple's Safari following in second place with 26.85 percent. (Unsplash)
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Apple’s sales in China — a weak spot for other tech companies — also came in a bit better than feared. (REUTERS)

Apple Inc. rallied Friday after an iPhone rebound helped quarterly earnings beat estimates, even as overall sales at the world's most valuable company remain in decline.

The results suggest that Apple is beginning to recover from a slump that's plagued both the computer and smartphone industries. It was a particular relief for investors after Qualcomm Inc., a key supplier, raised fresh concerns about phone demand earlier this week. Apple's sales in China — a weak spot for other tech companies — also came in a bit better than feared.

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As expected, Apple announced plans for $90 billion in stock repurchases — the same as last year's plan. The company also raised its quarterly dividend 4% to 24 cents a share.

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The shares jumped 4.7% to $173.57, the biggest single-day increase since Nov. 30. That added $107 billion to Apple's market value and brings its year-to-date gain to 34%.

Overall revenue amounted to $94.8 billion in the fiscal second quarter, exceeding the $92.6 billion analysts predicted. Though the sales fell 2.5% in the period, the company had warned investors to expect a drop of roughly twice that.

Though the performance was better than expected, it marked two straight quarters of sales declines — a first for Apple since the pandemic began. Earnings, meanwhile, were unchanged from a year earlier, at $1.52 a share. That compared with an average estimate of $1.43 a share.

On a conference call with analysts, Apple said that revenue in the current period would drop by a similar amount as in the past quarter, which ended April 1. That suggests a dip of about 3%. The company also said it would continue to see a negative impact from foreign exchange rates.

The prospect of Apple suffering a third consecutive sales drop raises questions about its growth prospects.

“I think growth has to be on the mind of Apple investors today,” Scott Kessler, an analyst at Third Bridge, said in an interview on Bloomberg Television. “People have to wonder about whether or not this is a double-digit grower in revenues in the foreseeable future or at any point in the future.”

Apple generated $51.3 billion in sales from the iPhone — its flagship product — in the second quarter, topping analyst predictions of $49 billion. That's just a 1.5% rise from a year ago but marked a record performance for a March quarter, Chief Executive Officer Tim Cook said. The increase came “despite the challenging macroeconomic environment,” he said in the statement.

Like many tech CEOs delivering earnings reports, Cook also discussed artificial intelligence. He said it had enormous potential and that Apple would continue weaving it into products in a “very thoughtful” way.

Read More: Apple's Tim Cook Says AI Concerns Still Need to Be Sorted Out

From a supply perspective, the second quarter was an opportunity for the iPhone 14 to rebound. The device had suffered from constraints during the previous period due to Covid policies in China.

The iPad saw revenue fall 13% to $6.67 billion, roughly in line with estimates of $6.7 billion. New models, which included a revamped entry-level version and Pro models with M2 chips, didn't do much to spur purchases in the quarter.

Likewise, revenue in the Mac division dropped 31% to $7.17 billion. That trailed forecasts of $7.7 billion. Research firms already warned that it was a bleak quarter for the lineup, with IDC estimating that Mac shipments fell about 40% in the quarter. Apple had updated the MacBook Pro and Mac mini, adding faster processors, but they failed to reignite the unit's sales.

The home, wearables and accessories division, which includes AirPods, the Apple Watch and the TV set-top box — fell less than 1% to $8.76 billion. That beat estimates of $8.5 billion. The company added a faster processor to the Apple TV during the holiday quarter and updated its HomePod speaker during the March quarter.

The services business, which includes iCloud, Apple Music, the App Store and the TV streaming service, brought in $20.91 billion, missing estimates of $21.1 billion. Still, it was a 5.5% gain from a year earlier. Last quarter, Apple promised that services revenue — alongside the iPhone — would accelerate.

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 also called out growth in India, where Apple recently opened its first retail outlets.

The company's overall sales would have been up last quarter if you held currencies constant, Cook said. For Apple and other US companies with a global footprint, a strong dollar has decreased the value of revenue generated in other parts of the world.

“Despite these challenges, we continue to manage for the long term,” Cook said.

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First Published Date: 07 May, 06:36 IST