Apple Disappoints By Missing Wall Street Expectations

Financial results from Apple highlight weakening consumer demand, as it insists iPhone production problems are over

Apple was one of the big tech players that last night reported its financial results, which underlined the challenging macroeconomic environment it currently faces.

Apple posted its biggest revenue fall since 2019, and its first profit miss in seven years, as well as its first iPhone sales drop since 2020.

Amazon meanwhile posted worse than anticipated earnings, and Google parent Alphabet recorded a pull-back by advertisers that impacted its revenues.

Apple iPhone 14, iPhone 14 Plus

Apple results

Apple’s first quarter ending 31 December 2022 saw the tech giant posting profits that missed Wall Street expectations for the first time since 2016, dragged down by iPhone sales falling for the first time since 2020.

That said, it recorded a healthy net profit of $29.9bn, but this was down from a net profit of $34.6bn in the same year-ago quarter.

Total revenues for the quarter fell 5 percent to $117.2bn, down from $123.9bn a year earlier.

Analysts had expected sales of $121.1 billion according to IBES data from Refinitiv.

The bad news was that Apple’s sales in each of its product category declined, except for increases in its services and iPads segment.

Apple’s services segment, which includes content businesses such as Apple TV+ and the App Store, saw revenues rise 6 percent to $20.8 billion.

Sales of the iPad were up a very healthy 30 percent to $9.4 billion.

But Apple’s cash cow, its iPhone sales, came in at $65.8 billion, down 8 percent from the year before and the first fall since 2020.

Meanwhile sales of Mac computers, which had boomed during Covid lockdowns, declined 29 percent to $7.7 billion.

Lastly the wearables and accessories segment (i.e. Apple Watch, AirPods etc), declined 8 percent to $13.5 billion.

Apple also added to gloom when it forecast that revenue would fall for a second quarter in a row, but it forecast that iPhone sales would likely improve as production had returned to normal in China after Covid-related shutdowns.

Economic conditions

CEO Tim Cook sought to strike an optimistic tone on sales of services and iPhones, and he said an uncertain economy is expected to hurt categories like gaming and digital advertising.

“As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do,” said Cook.

Apple chief executive Tim Cook at WWDC 2020. Image credit: Apple
Apple chief executive Tim Cook at WWDC 2020. Image credit: Apple

“During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base,” said Cook.