Apple reported third-quarter results that nearly beat Wall Street estimates, easing concerns that a troubled supply chain and a shaky economy would hit the tech giant’s sales.
Revenue rose 2% to $83 billion in the period ended June 25, compared with the median analyst forecast of $82.8 billion. Earnings came in at $1.20 a share, topping predictions of $1.16. The company did not provide guidance for the fourth quarter, continuing the approach it took at the beginning of the pandemic.
Apple’s iPhone and iPad sales rose better than expected in the quarter, although other products – including Macs and wearables – fell short of predictions. Services, a key growth area for Apple, nearly missed the estimates.
However, the number of iPhones shows that Apple is overcoming the decline in smartphone spending. The company also showed it could adjust to supply chain restrictions in part due to the Covid-19 shutdown in China. In April, Apple warning that issues will erase $4 billion to $8 billion from third-quarter revenue.
Against that backdrop, the latest numbers come as a relief. Apple shares rose more than 3% in extended trading.
While it outperformed some of its tech peers, Apple has become more cautious in the face of a strong growing economy. The iPhone maker is planning slow hiring and spending for several teams in 2023, Bloomberg reported earlier this month. Prior to Thursday’s results, Apple’s stock was down about 11% this year, slightly above the S&P 500 index.
Apple struggled to get enough supplies last quarter after China’s Covid-19 precautions closed some factories and hampered deliveries. Those problems have subsided but are not over yet.
China’s tough stance on the virus has led to some production restrictions on supplier Foxconn as recently like this week. The manufacturer, along with several others in the region, was forced to operate in a “closed-loop” system for seven days. That means factory workers cannot come into contact with people outside of their factories during that time.
Apple also hasn’t had much in the way of attracting customers in recent months. The company released the updated iPhone SE back in March and is expected to launch the new iPhone in September, missing the quarter that just ended.
Even so, that product generated $40.7 billion last quarter, beating estimates by about $39 billion.
Qualcomm Inc. added to investor concerns on the smartphone market on Wednesday, when the chipmaker said consumer appetite for the device had slowed. But the company says demand has been particularly weak for low-end and mid-range phones running Android, rather than iPhones.
Last quarter’s revenue from digital services like iCloud, AppleCare, Apple TV+, and Apple Music grew 12% to $19.6 billion during the period. That makes it Apple’s fastest-growing category, but the division balks at Wall Street projections of around $19.7 billion.
Apple’s wearables, home products, and accessories division — which includes smartwatches, HomePod, AirPods and Beats headphones — had $8.08 billion in revenue last quarter. Wall Street raised about $8.8 billion.
Apple generated $7.38 billion from Macs, missing expectations by about $8.45 billion. The company launched new MacBook Pro and MacBook Air models in July, but those models didn’t contribute to the latest results because the quarter ended in June. That means many consumers may have stopped. buying older versions of products – Apple’s two most popular Macs – compromise that category.
The Cupertino, California-based company is planning a slew of new Macs over the next few months, including high-end MacBook Pro, iMac, upgraded Mac minis, and refurbished Mac Pro. report.
The iPad, which was a strong performer at the height of the Covid-19 lockdowns, has slipped back to pre-pandemic levels. However, it generated $7.22 billion last quarter, higher than the $6.93 billion estimate. The company last updated the iPad in March with a new iPad Air model with the M1 chip. And it’s planning faster iPad Pro models for the end of this year.
The ongoing Covid restrictions in China have raised concerns about the impact on consumer spending. In a sign that Apple has had to be more aggressive in that market, now discount iPhone, Apple Watch and AirPods in China over the next few days as part of a rare sale.
Apple generated $14.6 billion from the country in the third quarter, down from a year earlier but better than analysts had predicted.
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