Apple earnings see 10% iPhone sales drop

Apple revealed on Thursday that iPhone sales fell 10% in the second quarter of fiscal year, from $51.33 billion to $45.96 billion. Part of the slowdown was caused by an 8% decline in China.

The fact that Apple has adopted AI more slowly than rivals like Google and Microsoft probably contributed to consumers’ decision to postpone buying a new iPhone.

Although Apple has vowed to make some significant announcements in that area (perhaps at WWDC in June), the iPhone 16 itself probably won’t be released until the fall.

Apple earnings see 10% iPhone sales drop

 

In an earnings call, CEO Tim Cook said, “Remember that we were able to replenish iPhone channel inventory and fulfill significant pent-up demand from the December quarter COVID-related supply disruptions on the iPhone 14 pro and 14 Pro Max.

As we described on the last call in the March quarter a year ago.” “We project that this one-time effect will cost the March quarter of last year’s revenue by $5 billion. Our company’s overall revenue for the March quarter of this year would have increased if this had not been included in the numbers from previous year.

Apple earnings see 10% iPhone sales drop

 

Despite the disappointing hardware numbers, the business was still able to outperform Wall Street estimates, and the stock increased by more than 6% after hours.

This was due to a rise in services income as well as a hefty $110 billion stock repurchase, which is a larger amount than the $90 billion purchase made last year.

Over the course of the year, services—which include products like iCloud, Apple TV+, and Apple Music—rose 14%. Apple has long anticipated a decline in hardware sales, and part of that loss has been offset by its growing emphasis on subscription services.

CFO Luca Maestri stated during the call, “We expect our services business to grow double digits at a rate similar to the growth we reported for the first half of the fiscal year.” “iPad should grow double digits,” he continued.

Next week, the firm is anticipated to unveil two new iPad models in a stand-alone event. The fact that the business hasn’t updated its tablet lineup since 2022 undoubtedly played a part in its own decline in annual sales, which fell from $6.67 billion to $5.56 billion.

Apple is also anticipated to unveil the M4 processor, the newest model in the Apple Silicon series, at the presentation on Tuesday. However, Microsoft’s efforts in the field, which are anticipated to be unveiled at its Build conference in late May, may soon pose a threat to the company’s chip advancement. Its yearly World Wide Developers Conference in June is probably going to include more hardware as well.

Vision Pro

Apple does not break out Vision Pro numbers. Rather, those figures are part of the Wearables, Home, and Accessories category, which also contains gadgets like the Apple Watch, HomePods, and AirPods. However, the majority of reports indicate lower-than-expected sales. Even yet, the firm made an effort to present the headset’s release in a favorable light.

 

Cook stated in a release, “We were thrilled to launch Apple Vision Pro during the quarter and to show the world the potential that spatial computing unlocks.” “We’re also anticipating an amazing Worldwide Developers Conference next month and an exciting product announcement the following week.”

Cook made a move to allay worries in February that the business was lagging behind Google and Microsoft by stating that further details about its generative AI initiatives would be available “later this year.” The topic will undoubtedly be discussed extensively at the iPad event, but it appears the company is holding off on making the big announcement until WWDC in June.

Meanwhile, rumors have said that Apple plans to include Google’s Gemini and OpenAI’s ChatGPT into upcoming iPhone models.

Cook replied, “I don’t want to get in front of our announcements, obviously,” to a query posed on the topic during the call this evening. “We see generative AI as a very significant opportunity across all of our products,” I would simply remark. And we think we have distinct advantages over others there. We will thus be discussing it more in the coming weeks.