After Thursday's trading hours Eastern Time, Apple released a mixed financial report.
Although the overall revenue and profit performance of the company exceeded Wall Street's expectations, the company's sales in China did not meet Wall Street's expected targets. After the financial report was released, the company's stock price fell by 3% after hours.
The financial report shows that in the first quarter ending on December 30th last year,
Apple's net revenue was $119.58 billion, a 2% increase from $117.154 billion in the same period last year, better than analyst expectations of $117.91 billion;
The net profit was 33.916 billion US dollars, an increase of 13% compared to the same period last year's 29.998 billion US dollars.
The profit per share was $2.18, higher than the analyst's expected $2.10.
Among them, iPhone sales reached $69.7 billion, an increase of 6%, exceeding analyst expectations of $67.82 billion.
Apple's overall revenue increased by 2% in the first quarter, ending four consecutive quarters of sales decline due to strong sales of iPhone 15 series products. The total installed capacity of Apple's devices reached 2.2 billion units, up from 2 billion units a year ago.
However, from a regional perspective, Apple's sales in its third largest market, Greater China, were $20.82 billion, lower than analysts' expected $23.53 billion.
Bob O'Donnell, an analyst at TECHanalysis Research, said:
"The overall strong performance of iPhone 15 sales clearly reflects the suppressed demand for smartphones exceeding expectations, but the significant decline in China is worrying as it may be the beginning of a longer-term downward trend in China."
The sales prospects of iPhone in China are worrying
Apple CEO Tim Cook said:
"We are indeed satisfied with the 6% increase in iPhone revenue... Our iPhone has achieved strong double-digit growth in emerging markets outside of China. The iPhone has performed well in these markets."
He added, "China is the most fiercely competitive smartphone market in the world, and this has not changed."
Cook also said that considering the exchange rate factor, iPhone sales in Chinese Mainland fell by about 4% to 6% in the quarter, but the company's iPhone ownership in China reached an all-time high.
In the short term, analysts are increasingly concerned about the sales situation of Apple's iPhone in China: with the resurgence of Huawei phones, iPhones are facing increasingly fierce competition in China, and there is also a risk of cooling down demand for smartphones in China.
According to a Counterpoint Research report, the shipment volume of iPhones in China has declined this quarter, mainly due to Chinese consumers wanting to purchase more innovative foldable screen phones and the increasing competitive pressure brought by Huawei.
However, in other Asian regions outside of China and Japan, Apple's sales reached $10.16 billion, higher than analysts' expectations of $9.75 billion. Cook said that iPhone sales in South Korea have reached a historic high, and South Korea is the headquarters of Apple's main competitor Samsung.
Service business slightly lower than expected
The biggest growth area for Apple in the first quarter was in its services business (including Apple TV+services, music, iCloud storage, and App Store), with sales increasing by 11% to reach $23.12 billion. But these results were slightly lower than analysts' expectations of $23.35 billion.
"The important service business is slightly lower than expected, which may be the most concerning project for investors as this business line remains the most important growth driver," D A. Davidson analyst Gil Luria commented.
Apple's app store also faces challenges in Europe, where a new law that will take effect in March will allow developers to bypass the process of paying commissions to Apple and instead open other app stores on the iPhone.
Looking at other products, Apple's Mac sales slightly increased in the first quarter, reaching $7.78 billion, in line with analyst expectations of $7.73 billion. IPad sales decreased by 25% to $7.02 billion, lower than the expected $7.33 billion.
The sales of Apple's wearable devices division, including AirPods and Apple Watch, fell to $11.95 billion after executives warned of weak demand. However, this result is slightly higher than the expected $11.56 billion.
Several models of Apple watches have been in legal disputes with medical device manufacturer Masimo and have briefly been taken down. Later, in order to comply with legal rulings, Apple removed the blood oxygen monitoring function of Apple watches, which may also affect some sales demand.
In January of this year, Microsoft briefly replaced Apple as the world's most valuable company, and investors believed that Apple was lagging behind in the artificial intelligence competition among tech giants on Wall Street.
Apple has stated that it is researching generative artificial intelligence, but has focused on Vision Pro headphones. Analysts predict that this earphone will not bring substantial revenue in the coming years.
Luca Maestri, Apple's chief financial officer, said that Apple's revenue performance in this fiscal quarter (as of the end of March) would be lower than that of a year ago, when the quarter was boosted by the post COVID-19 epidemic and gained additional sales growth. If the additional revenue growth caused by this special situation is excluded, Apple's total revenue and iPhone revenue for this fiscal quarter will remain unchanged from the same period last year.