Apple reported fiscal fourth-quarter earnings on Thursday that surpassed estimates for both sales and earnings per share, although overall sales still decreased for a fourth consecutive quarter. Shares dropped in after-hours trading when executives suggested that the company may not be able to return to an uptrend in the pivotal holiday quarter.
Apple reported fiscal fourth-quarter earnings on Thursday that exceeded analyst expectations for sales and earnings per share, however, overall sales declined for the fourth consecutive period. Every hardware segment with the exception of the iPhone dropped year-over-year, with notably sharp dips in iPad and Mac sales. In response to this news, Apple shares dropped by more than 3% in the extended trading session, and executives indicated the firm might not restore growth in the holiday season.
The performance was compared to consensus figures from LSEG (formerly Refinitiv): EPS of $1.46 per share compared to the expected $1.39, revenue of $89.5 billion versus the predicted $89.28 billion, iPhone revenue at $43.81 billion - in line with expectations - Mac revenue of $7.61 billion against the expected $8.63 billion, iPad revenue at $6.44 billion instead of the forecasted $6.07 billion, Wearables revenue of $9.32 billion compared to $9.43 billion expected, and Services revenue of $22.31 billion compared to $21.35 billion.
Although Apple executives did not put forward a formal guidance, Chief Financial Officer Luca Maestri said they anticipate December quarter revenue to be similar to the same period a year earlier, notwithstanding the fact that this period will include one fewer week. Analysts were expecting $122.98 billion in revenue, a year-on-year growth of close to 5% in the company's key quarter. Net income was reported at $22.96 billion, or a per share income of $1.46, versus $20.72 billion, or $1.29 per share, registered in the same quarter last year. For the complete fiscal year, Apple reported sales of $383.29 billion, a 3% drop from the prior year, while revenue decreased by less than 1% in the September quarter.
iPhone sales were equal to predictions, registering a more than 2% increase from the prior year. The reported period included only around a week of iPhone 15 sales.
During the September quarter, Apple CEO Tim Cook revealed to CNBC's Steve Kovach that iPhone 15 had surpassed the performance of its predecessor, the iPhone 14. However, the Pro and Pro Max iPhones suffered from supply constraints due to their high demand. Additionally, Macs and iPads both saw a decrease in sales compared to the same period in the previous year. Maestri had warned that iPad and Mac sales would dip by double-digit percentages, and the results revealed Mac sales had decreased by nearly 34%. To indicate that sales could soon be stimulated, Apple held an unusual evening launch event for its new MacBook Pro laptops and iMac desktop last month. Cook stated on CNBC that the comparison with the Mac sales from the same period the year prior was difficult due to a huge supply disruption that had pushed fourth quarter sales from the previous year. He forecasted that the Mac would have a much better fourth quarter due to the new M3 chips, the new products, and the absence of the year-over-year comparison phenomenon. On the other hand, iPad revenue was down 10%, and no new products had been announced ahead of the holiday season this year.
Apple's services business, including iCloud storage, Apple Music, AppleCare warranties, and the Google search engine deal on Safari, was a highlight of the quarter. Services revenue surpassed analyst expectations and rose 16% year over year. The installed base of devices (iPhone, Mac, iPad) had attained an all-time high during the quarter, and Apple had over 1 billion paid subscriptions, which include both Apple's own services and apps. Wearables, including AirPods and Apple Watches, decreased 3% year over year. Greater China sales remained static, and Apple had an excess of $162.1 billion in cash and cash-like securities at the end of the quarter. Furthermore, the company declared a dividend of 24 cents per share and committed $25 billion to share repurchases and dividends.
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