Apple reports first decline in revenue in three-and-a-half years
$Apple(AAPL.US$ Q1 FY23:
• Revenue -5% Y/Y to $117.2B ($4.5B miss).
Services +6% Y/Y to $20.8B.
Products -8% Y/Y to $96.4B.
• Operating margin 31% (-2pp Y/Y).
• Operating cash flow margin 29%.
• EPS $1.88 ($0.07 miss).
• Revenue -5% Y/Y to $117.2B ($4.5B miss).
Services +6% Y/Y to $20.8B.
Products -8% Y/Y to $96.4B.
• Operating margin 31% (-2pp Y/Y).
• Operating cash flow margin 29%.
• EPS $1.88 ($0.07 miss).
Apple posted a decline in quarterly revenues for the first time in three-and-a-half years after “significant” supply chain disruptions in China delayed deliveries of iPhones during the important holiday period.
The worse than expected performance highlighted Apple’s dependence on China for manufacturing and came after shipments of its high-end iPhones were hit by an outbreak of Covid-19 at an assembly hub run by partner Foxconn in Zhengzhou.
The worse than expected performance highlighted Apple’s dependence on China for manufacturing and came after shipments of its high-end iPhones were hit by an outbreak of Covid-19 at an assembly hub run by partner Foxconn in Zhengzhou.
Shares of Apple fell by more than 3 per cent in after-hours trading.
Apple’s revenue shortfall came as $Amazon(AMZN.US$ and $Alphabet-C(GOOG.US$ $Alphabet-A(GOOGL.US$ Alphabet pointed to further weakening in some of their core markets in the latest quarter. Taken together, the earnings reports from three of the world’s biggest companies provided a note of caution for investors a day after better than expected results from Facebook owner $Meta Platforms(META.US$ helped fuel a sharp rally in technology stocks.
Revenue growth slowed and earnings stalled at Amazon Web Services, the ecommerce group’s biggest moneymaker, as big customers looked for ways to save money on their cloud spending.
Meanwhile, Alphabet’s revenue came in below expectations as its advertising revenue fell for only the second time in its history, partly because of the strength of the US dollar and comparisons with soaring growth a year before.
Revenue growth slowed and earnings stalled at Amazon Web Services, the ecommerce group’s biggest moneymaker, as big customers looked for ways to save money on their cloud spending.
Meanwhile, Alphabet’s revenue came in below expectations as its advertising revenue fell for only the second time in its history, partly because of the strength of the US dollar and comparisons with soaring growth a year before.
Cook said that the China supply chain challenges affecting iPhone shipments had been sorted out, adding: “We’re now at the point where production is what we need it to be. And so the problem is behind us.”
But he offered a more gloomy assessment of sales of Apple’s Mac computers, warning that the while the company was “well positioned” in the PC market “it will be a little rough in the short-term”.
Despite the lacklustre earnings and outlook, Apple did not announce any job cuts or a cost-cutting programme, marking it out as the only large tech company to avoid mass redundancies at a time when others are making large headcount reductions.
Apple did not provide any forward guidance, something it has not done for three years owning to what it describes as pandemic uncertainty.
Apple did not provide any forward guidance, something it has not done for three years owning to what it describes as pandemic uncertainty.
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