Apple reports first sales decline in three and a half years

Apple posted its first quarterly sales decline in three-and-a-half years after a “significant” supply chain disruption in China delayed iPhone deliveries during the critical holiday period.

The weaker-than-expected results highlight Apple’s reliance on China for manufacturing, after shipments of the company’s high-end iPhones were hit by the Covid-19 outbreak at partner Foxconn’s assembly hub in Zhengzhou. bottom.

CEO Tim Cook suggested that even though iPhone sales were expected to “accelerate”, earnings in the first three months of the year would also be lower than last year.

apple Total revenue for the latest quarter was $117.2 billion, down 5.5% from the same period in 2021 and below analyst expectations of $121.1 billion. Net income of $30 billion was 13.4% lower than last year and slightly below expectations.

“Overall, we expect year-over-year earnings performance in the March quarter to be similar to the December quarter,” Cook said, adding that Mac and iPad sales were also impacted by a “challenging” economy. Yes, and will probably decrease by two orders of magnitude, he added.

Apple shares fell more than 3% in after-hours trading.

Apple’s earnings shortfall came as Amazon and Alphabet noted further weakness in some of their core markets in the latest quarter. In summary, the earnings reports of the world’s three biggest companies were a wake-up call to investors a day after Facebook owner Meta’s better-than-expected results spurred a sharp rally in tech stocks. .

slowing revenue growth, revenue slowdown Amazon Web Services, the e-commerce group’s largest revenue generator, was looking for ways to save on cloud spending for its large customers.

in the meantime, Alphabet Earnings The company’s advertising revenue fell for the second time in its history and fell short of expectations, partly due to the strong dollar and a comparison to the previous year’s rapid growth.

cook china supply chain The challenges affecting iPhone shipments have been sorted out, adding: So the problem is behind us. ”

But he gave a more pessimistic assessment of Apple’s Mac computer sales, saying that while the company is “well-positioned” in the PC market, “it will be a little tougher in the short term.” warned.

Despite the lackluster earnings and outlook, Apple has not announced any job cuts or cost-cutting programs, and is the only company to avoid large-scale layoffs at a time when other companies are making significant cuts. We emphasized that it is a large technology company.

Apple did not provide forward guidance, which it has not done in three years, citing pandemic uncertainty.

In an interview with the Financial Times, finance chief Luca Maestri said Apple’s “active installed base” (the number of devices in use) has crossed the 2 billion threshold from 1.8 billion a year ago. said. “That’s just twice the number of active devices he had seven years ago,” he said.

Maestri said iPhone sales would have been higher in the quarter had it not been for supply chain issues in China.

Apple warned three months ago that a strong dollar could cut earnings by up to 10 percentage points. The actual impact was about 8 percentage points.

“Eight percent is a lot of revenue lost due to the strong dollar, but the dollar has weakened a bit, so we’re better than we were three months ago,” said Maestri.

Additional reporting by Richard Waters Apple reports first sales decline in three and a half years

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