When Apple released version 16 of its iPhone in September, some tech reviewers described it as a gradual improvement over previous models.
Apple customers didn’t care. They bought the new iPhone 14 in bulk.
On Thursday, the world’s most valuable company said strong demand for the iPhone helped it boost total revenue by 8 percent to $90.1 billion in the three months ending September, ending a fiscal year in the which reported sales growth every quarter. The company said profit rose nearly 1% to $20.7 billion.
The company said iPhone sales rose 10 percent to $42.6 billion in the quarter ending September, a significant slowdown from the 47 percent increase it reported in the same period last year. The branded product accounts for about half of the company’s total revenue.
Speaking to analysts, Apple said its business is slowing in the current quarter due to declining Mac sales and services. Noting the slowdown, he joined peers like Google, Amazon and Microsoft in warning that their businesses are slowing as the economy weakens.
Although Apple’s earnings beat analysts’ forecasts, its shares first fell after hours before reversing and rising more than 1 percent to $146.20. The shares fell 3 percent before the market closed.
Apple CEO Tim Cook said the company faces inflationary pressures on wages and device components. These factors, as well as the strengthening of the dollar, have pushed up the prices of devices sold internationally.
Some Wall Street analysts see Apple as a safe haven for investors amid a slowing economy. In a year when smartphone sales are falling, the iPhone has increased its market share. Other areas of the company, such as the App Store, Apple Watch and AirPods, are also growing, although they don’t come close to the scale of iPhone sales.
Other analysts are not convinced. They see the recession hitting the company’s two biggest markets, the US and China, and fear that Apple will catch up with the recession. They predict the iPhone business will decline, just as Mac and iPad sales will cool as students and workers return to classrooms and offices.
“Apple is a person,” said Tony Sacconaghi, an analyst at Bernstein Research. “Not surprisingly, even this major consumer brand is not immune to economic headwinds.”
The services business posted the lowest quarterly sales growth this quarter, rising 5 percent to $19.19 billion. It seems that the company intends to avoid such a slowdown in the current period. This week, monthly prices for Apple Music were increased by $1 and Apple TV+ by $2. He also said he would start taking a 30 percent commission on promotional payments to boost social media posts, and would start taking a 30 percent commission on transactions with non-fungible tokens on iPhone and iPad.
“This is now, in a difficult economic environment, showing that their business is strong,” said Trip Miller, founder of Gullane Capital Partners, an investment firm based in Memphis, Tennessee.
However, the biggest challenge facing Apple is its supply chain. China makes over 90 percent of the iPhones it sells worldwide, as well as many of its iPads and Macs. Severe restrictions imposed in the country due to the coronavirus prompted it to close factories to suppress outbreaks, costing Apple about $4 billion in lost iPad and Mac sales. Those concerns first extended to the iPhone factory this week when Foxconn reported a Covid outbreak at Apple’s assembly plant in Zhengzhou, China.
Apple is also coping with growing geopolitical tensions between the US and China. Beijing’s military provocations have inspired Washington to examine the supply chain risks in the event of a Chinese invasion of Taiwan. The White House recently imposed new restrictions on the sale of US technology to Chinese chipmakers, and Chinese President Xi Jinping last week urged his country to be prepared for “dangerous storms.”
