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Apple revenue and net profit below expectations



(New York) Apple reported lower-than-expected quarterly revenue and net profit on Thursday, which fell on weaker iPhone sales, which the group attributed mainly to a problem of offer.

Revenue was $117.1 billion, down 5.4% year on year for the October-December period, which is the first quarter of its lagged fiscal year, according to a statement.

In post-closing Wall Street trading, the stock lost just over 2%.

The results of the Cupertino (California) group were marked by the contraction in iPhone sales, down more than 8% over one year.

Apple reported in early November disruptions at the Zhengzhou (China) site, the largest production plant for the brand’s famous phones, due to an outbreak of COVID-19 cases.

The company had recognized that these events would reduce the volumes of iPhone 14 Pro assembled in the factory.

During the earnings conference call, Chief Executive Tim Cook said on Thursday that the slowdowns had continued “during most of December”.

The manager put the halt in iPhone sales into perspective, stating that, excluding currency effects, they were almost stable.

The high level of the dollar thus penalized, last year, the American companies which carry out a significant part of their sales abroad.

He also claimed that the claim was not in issue. “We believe that (sales of) iPhones would have grown last quarter had it not been for the supply shortage,” the chief executive said.

However, Tim Cook also attributed the fall in turnover to a “difficult macroeconomic environment”. “Apple is not immune” against this degraded situation, acknowledged the CEO.

Service growth

In total, sales from physical products eroded by 7.7% over one year. In addition to iPhones, this slide is also attributable to Mac computers, whose sales fell by more than 28%. Only the iPads pulled out of the game (+29%).

For GlobalData analyst Neil Saunders, the COVID-19 effect, which had seen a renewed appetite for consumer electronics, “dissipated” and was replaced by “a more cautious consumer thinking about the replacement of their devices”, “even if Apple’s products remain attractive”.

The drop in products was partially offset by activity in services, which includes the App Store application store, the Apple Music streaming platform or remote data storage services (cloud computing).

The service division has seen its revenues grow by 6.4%, and now weighs nearly 18% of turnover, a sign of Apple’s gradual transformation.

Geographically, all the regions in which the company operates have seen a drop in their turnover.

Group-wide net profit was $29.9 billion, down 13%.

After the turbulence at the end of 2022, “from a supply point of view, production is now at the level we want”, described Tim Cook. “We are responding to demand. »

For the first quarter of 2023, the second of its fiscal year, Apple expects revenue to decline further year on year, Chief Financial Officer Luca Maestri said.

The group plans to do better, year on year, for sales of iPhones than in the previous quarter.

Apple “manages to release good figures even in a difficult economy”, estimated Neil Saunders. However, the firm has been suffering from a “failure of innovation for a while” and “plays it safe” now with its existing products.

“If he wants to return to exceptional results, he will have to make radical advances. »

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