Apple’s Stock Sees Decline as December Quarter Revenue Outlook Falls Short

In a recent report, Apple announced its fiscal fourth-quarter earnings, surpassing analyst expectations in terms of sales and earnings per Apple share. However, the tech giant revealed that its overall sales have experienced a decline for the fourth consecutive quarter. All of Apple’s hardware businesses, except the iPhone, reported year-over-year declines, particularly in the iPad and Mac segments. Apple shares took a hit, dropping over 3% in extended trading as the company’s executives hinted at the possibility of not returning to growth during the upcoming holiday quarter.

Here’s a breakdown of how Apple share performed compared to LSEG (formerly Refinitiv) consensus expectations:

• Earnings per Share (EPS): Apple reported $1.46 per share, exceeding the expected $1.39 per Apple share.

• Revenue: The company’s revenue stood at $89.5 billion, slightly edging out the expected $89.28 billion.

• iPhone revenue: Apple’s iPhone revenue reached $43.81 billion, in line with expectations.

• Mac revenue: The Mac segment fell short of expectations, recording $7.61 billion instead of the anticipated $8.63 billion.

• iPad revenue: The iPad segment reported $6.44 billion, missing the expected $6.07 billion.

• Wearables revenue: Apple’s wearables generated $9.32 billion, slightly lower than the expected $9.43 billion.

• Services revenue: Apple’s services division outperformed expectations, with revenue of $22.31 billion, surpassing the expected $21.35 billion.

• Gross margin: The company’s gross margin reached 45.2%, beating the expected 44.5%.

Apple refrained from providing formal guidance, but the company’s finance chief, Luca Maestri, indicated that they expected December quarter revenue to be “similar to” the previous year’s revenue. It is essential to note that this year’s December quarter will have one less week, which could impact year-over-year comparisons. Analysts were hoping for $122.98 billion in revenue for the December quarter, which would signify a 5% year-over-year growth, marking Apple’s most critical quarter of the year.

3% Decrease from the Prior Year

For the full fiscal year, Apple reported a net income of $22.96 billion, or $1.46 per Apple share, compared to $20.72 billion, or $1.29 per share, in the previous year. The company’s total sales for the fiscal year amounted to $383.29 billion, reflecting a 3% decrease from the prior year. In the September quarter, quarterly revenue experienced a less than 1% decline.

Apple share slips despite strong iPhone sales

iPhone sales remained consistent with Wall Street expectations, showing more than a 2% increase from the previous year. It was the only hardware segment that exhibited growth during the quarter, despite the limited time frame that included the release of the iPhone 15.

Apple’s CEO, Tim Cook, noted that the iPhone 15 performed better during the September quarter than its predecessor, the iPhone 14. Cook also mentioned that the more expensive Pro and Pro Max iPhones faced supply constraints due to high demand. However, Apple’s Mac and iPad businesses both saw declines during the quarter, with Mac sales falling nearly 34% year over year. Cook expressed optimism for the Mac’s performance in the December quarter, attributing it to the introduction of the new M3 chips and product releases. He acknowledged the challenge of comparing Mac sales to a record-setting fourth quarter in the previous year.

iPad sales also experienced a 10% drop compared to the same period the previous year, despite the absence of new product releases leading up to the holiday season. Apple’s services division remained a highlight, with the company reporting $22.31 billion in services revenue, surpassing analyst expectations and marking a 16% increase from the previous year. The services division includes online subscriptions, warranties from AppleCare, and the partnership with Google for the default search engine on Apple’s Safari browser, which has been the subject of the Department of Justice’s antitrust case against Google. Apple’s wearables business, encompassing products like AirPods and Apple Watch, also declined over 3% year over year.

Apple’s Third-Largest Market— Sales Remains Flat

In Greater China, Apple’s third-largest market, sales remained relatively flat year over year, with the company reporting $15.08 billion in revenue for the region, which includes Hong Kong and Taiwan. Despite these fluctuations in performance, Apple continues to maintain substantial cash reserves, with $162.1 billion in cash on hand. The company also announced a dividend of 24 cents per Apple share to be paid this month and revealed that it had spent $25 billion during the quarter on Apple share repurchases and dividends.