Not surprisingly, Apple failed to escape the fate of declining performance in its latest quarter. On November 3rd, the company released its financial report for the fourth quarter of the 2023 fiscal year (the third quarter of the 2023 natural year), which showed that although net profit achieved a slight increase, revenue had declined for four consecutive quarters. According to this trend, it is unclear whether the attitude of the capital market towards Apple remains as enthusiastic as ever.
The biggest crisis facing Apple is the strong return of Huawei smartphones. In the absence of Huawei for more than two years, Apple has been "win thoroughly" in the high-end mobile phone market. However, after the launch of Huawei's Mate 60 series and Mate X5 series, their sales have grown visibly, and the mobile phone market pattern has gradually begun to change. The sales highlight of the iPhone 15 series is in the current quarter, which also means that the next financial report release will be the bigger test facing Apple.
Revenue has been declining for four consecutive quarters
According to the financial report, Apple's operating revenue in the fourth quarter was $89.498 billion, a year-on-year decrease of 1%; The net profit was 22.956 billion US dollars, an increase of 11% year-on-year; Quarterly diluted earnings per share were $1.46, a year-on-year increase of 13%.
This is the fourth consecutive quarter of revenue decline for Apple. Prior to this, the company's revenue decreased by 5% year-on-year in the first fiscal quarter, decreased by 3% year-on-year in the second fiscal quarter, and decreased by 1% year-on-year in the third fiscal quarter.
Despite weak performance, according to the stock market reaction, on November 2nd local time, Apple's stock price rose 2.07% to $177.57 per share, with a market value of $2.78 trillion. On November 3rd, the Hong Kong stock market's Apple concept stock rose, with Qiu Ti Technology up nearly 7.87%, Ruisheng Technology up 7.33%, Shunyu Optical Technology up over 5.28%, and Fu Zhi Kang up 1.72%.
From the performance of various regions, Apple only maintained growth in the Americas market this quarter, while other regional markets experienced declines. Among them, the Americas department achieved a revenue of 40.115 billion US dollars, compared to 39.808 billion US dollars in the same period last year; The revenue of the European department was $22.463 billion, compared to $22.795 billion in the same period last year; The revenue of the Japanese department was $5.505 billion, compared to $5.7 billion in the same period last year; The revenue of other Asia Pacific regions was $6.331 billion, compared to $6.373 billion in the same period last year.
The Greater China region, which just resumed growth last quarter, has once again fallen into a downward trend this quarter, with revenue of $15.084 billion, a decrease of 2.5% compared to $15.47 billion in the same period last year.
Apple CEO Cook stated that the decline in revenue in Greater China is mainly related to exchange rate fluctuations, and if calculated at a constant exchange rate, this portion of revenue actually increases. Cook also mentioned the performance of each major product line, saying that the sales of iPhone products in Chinese Mainland reached a new high in the fourth fiscal quarter of the past years, and the service business also achieved positive growth.
In fact, globally, the performance of these major product lines of Apple is consistent with its performance in the Chinese Mainland market. In the fourth fiscal quarter, Apple's Mac and iPad businesses continued the downward trend of the previous quarter, with net sales of $7.614 billion for the Mac business, a year-on-year decrease of 34%; The net sales of the iPad business were $6.443 billion, a decrease of 10% year-on-year.
For the decline in the Mac business, Apple CFO Luca Maestri attributes it to two reasons: one is, as Cook said, the release of suppressed sales last year, resulting in a high base, and the other is the intense market competition.
Cook is quite optimistic about the performance of the Mac next quarter, as Apple just released a new M3 chip series three days ago, including M3, M3 PRO, and M3 MAX, as well as 14 inch and 16 inch laptops equipped with M3 chips and 24 inch iMac.
The wearable, home and accessory businesses, which have consistently performed well, also experienced a decline in this quarter, with net sales of $9.322 billion, a year-on-year decrease of 3%.
In order to boost the sales of Apple Watch products, according to media reports, the Apple Health team has delved into the development of relevant code to enable Apple Watch and Health applications to be compatible with billions of Android devices, and the development progress is nearing completion. However, Apple ultimately suspended the project due to "business concerns", citing the possibility of releasing Apple Watch compatibility to Android devices, So the value of Apple watches for the iPhone will be diluted. Our reporter has sought confirmation from Apple regarding this matter, and as of press release, the other party has not provided a response.
The Hidden Growth Crisis of iPhone
Among the five major product lines, only the iPhone and services businesses achieved growth in the fourth fiscal quarter. Among them, the net sales of the iPhone business were $43.805 billion, reversing the downward trend of the previous quarter, with a year-on-year increase of 3%. The net sales of the services business were $22.314 billion, with a year-on-year increase of 16%.
That is to say, the iPhone was the only category among Apple's hardware products that achieved revenue growth in this quarter. Communication expert Ma Jihua believes that this is because the smartphone market has rebounded, while the price of Apple's iPhone 14 series has decreased, and the iPhone 15 series was launched later, which has little impact on Apple's fourth quarter performance. The Counterpoint smartphone sales report shows that in the third quarter of 2023, smartphone sales in China decreased by 3% year-on-year, with a narrower year-on-year decline.
In fact, since the release of the iPhone 15 series in September this year, there has been less optimistic news in the industry about this series of new products.
Firstly, there is a price issue. Shortly after the launch of the iPhone 15, some third-party channels fell below the official selling price, and only some iPhone 15 Pro Max series had a small premium, and the premium space was not as good as in previous years.
In addition, there is a sales issue. According to statistics released by international market analysis firm Counterpoint Research, in the more than half month since the launch of Apple's iPhone 15 in China, its sales have decreased by 4.5% compared to the performance of the iPhone 14 series in the same period last year. Jeffrey's analysts believe that the sales of the iPhone 15 are expected to show a double-digit percentage decline compared to the previous generation.
The reason for these phenomena is not only that the innovation breakthrough of the iPhone 15 itself is still not significant, but also that the Huawei Mate series of new products and the Mate X5 were launched in the first half month of the iPhone 15 release.
With its new flagship, Huawei has shown strong sales growth. According to data released by BCI, one month after the release of the Mate60 series, Huawei's mobile phone market share ranked first in the domestic market. Counterpoint Research believes that the sales of Huawei Mate 60 Pro alone may reach 6 million units this year, while Huawei only sold about 22 million smartphones last year.
Ma Jihua told our reporter that the strength of Huawei's mobile phones has obviously impacted the sales of Apple's mobile phones in the Chinese Mainland market. Some users have purchased Huawei's latest models, while others will wait and see, which has put pressure on the sales of Apple's mobile phones.
In addition, as far as Apple itself is concerned, Cook stated at the financial report meeting that the supply of the iPhone 15 Pro and iPhone 15 Pro Max is limited, which has affected Apple's total iPhone revenue. Currently, these two phones still face supply constraints and may not reach supply and demand balance until later in the quarter.
This means that Apple's smartphone sales in the next quarter will face great pressure, and the smartphone market pattern may undergo a new round of changes due to Huawei's strong return.
It is worth mentioning that the market has completely different attitudes towards Apple and Huawei, as can be seen from the tendency of capital. Since Huawei released its new product on August 29th, the benefited Huawei concept stocks have covered the entire industry chain upstream and downstream, and have a long tail effect, which has persisted until now. However, Apple related concept stocks have not formed large-scale growth.