Apple Inc reported its worst holiday performance in four years after supply snags and a softening economy hurt iPhone sales, exposing cracks in what has been one of tech’s most resilient companies.
Revenue fell 5.5 percent to US$117.2 billion in the December quarter, Apple’s biggest sales period of the year, coming in well short of analysts’ average estimate of US$121.1 billion.
It was Apple’s first quarterly decline since 2019, and the first time the company has missed analysts’ holiday sales projections since 2015.
Photo: AFP
The shares slid as much as 5.6 percent in late trading following the report, though they did pare some of the losses after Apple CEO Tim Cook discussed a rebound in China, which is emerging from strict COVID-19 rules.
He also said Apple’s production problems have subsided.
The iPhone and Mac were particular weak spots for Apple last quarter, dragged down by a broader slump afflicting mobile devices and computers. The COVID-19 restrictions in China added to Apple’s woes, making it harder to ship enough of the most popular versions of the iPhone.
Timing was another issue: The company did not launch new Macs and HomePods until recent weeks, missing the end of the holiday quarter.
“The world continues to face unprecedented circumstances — from inflation to war in Eastern Europe to the enduring impacts of the pandemic — and we know that Apple is not immune to it,” Cook said on a conference call. “But whatever conditions we face, our approach is always the same. We are thoughtful and deliberate.”
Earnings came in at US$1.88 per share during the fiscal first quarter, which ended on Dec. 31. That compared with an average estimate of US$1.94 per share.
The Cupertino, California-based technology giant did not provide a detailed outlook for the second quarter, continuing an approach it adopted at the start of the pandemic in 2020, but it did lay out some expectations.
Apple said that its performance in the March quarter would mirror that of the first quarter. That means a revenue decline of about 5 percent — compared with US$97.3 billion a year earlier — could be in the cards. On the positive side, the company said iPhone revenue would accelerate in the March quarter and that services revenue would grow. However, the iPad and Mac would likely decline.
Apple generated US$65.8 billion from the iPhone in the period, missing the estimate of US$68.3 billion. That also represented a decline from the US$71.6 billion that the product brought in a year earlier.
While the latest iPhone was a more significant leap than the previous version, the factories producing the popular Pro models in China were shuttered for weeks during the quarter due to COVID-19 pandemic restrictions.?
The company made US$7.74 billion from the Mac, far short of the US$9.7 billion estimate. That was also a significant drop from US$10.9 billion a year ago.
It was a tough year-on-year comparison given that Apple launched a revamped MacBook Pro line in the previous holiday period. This time around, it did not update the MacBook Pro and Mac mini models until this quarter.
Cook said that Apple would continue to refine its supply chain.
“The last three years have been a pretty difficult time, between COVID and silicon shortages and the like,” he said. “I think we have had a very resilient supply chain.”
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
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