AP – Apple managed to boost both its sales and profit during a summertime quarter that depressed the fortunes of most other major tech companies, but that doesn’t necessarily mean the iPhone maker will be immune to a potential recession.
Even though Apple fared reasonably well, the July-September results released on Thursday signaled that the world’s most valuable company is facing some of the same economic headwinds that hammered the profits of Microsoft and the corporate parents of both Google and Facebook.
Apple’s fiscal fourth quarter revenue rose eight per cent from the same time last year to USD90.1 billion. That was an improvement from the scant two-per-cent uptick in revenue during its April-June quarter when supply problems caused by pandemic-related factory shutdowns dinged its sales.
The Cupertino, California, company’s profit for the most recent quarter totalled USD20.72 billion, or USD1.29 per share, up by less than one per cent from the same time last year.
Both the revenue and earnings per share were slightly above analyst estimates. But on the downside, sales of Apple’s most popular product, the iPhone, and another big moneymaker, and the services division, were both lower than analysts had been anticipating – a sign consumers may be cutting back amid the highest inflation in 40 years.
Apple is facing “increasingly difficult economic conditions,” chief executive officer (CEO) Tim Cook acknowledged during a Thursday conference call with analysts. “A lot of people in a lot of places are struggling.”
Those challenges are one of the reasons Apple expects its revenue growth to decelerate during the current October-December period, even though this year’s quarter will include one more week than last year’s, Apple’s Chief Financial Officer Luca Maestri warned during conference call. The strong US dollar, which has lowered Apple’s reported sales internationally, is also contributing to the anticipated slowdown.
Investors initially reacted negatively after Maestri’s made that forecast, driving down Apple’s shares by about three per cent in extended trading, but seemed to be feeling more optimistic about the company’s prospects by the time management concluded the conference call.
Apple’s shares were up by more than one per cent late Thursday. Mirroring other once high-flying stocks in tech, Apple’s stock still has dropped almost 20 per cent so far in 2022.
The iPhone – still Apple’s marquee product 15 years after its debut – accounted for most of its success during the past quarter, even though the company didn’t sell quite as many of the devices as analysts had hoped. Boosted by the release of four new models in late September, iPhones sales climbed 10 per cent from the same time last year to USD42.63 billion.
But industry analysts are starting to fret over how much longer consumers will splurge on new phones as they feel the pinch of the past year’s stubbornly high inflation rates. If those financial pressures persist, it could cause more households to curtail their spending during the holiday shopping season, especially on the kind of pricey gadgets that are Apple’s cornerstone.