Apple’s results have fallen amid difficulties making and buying the newest iPhone.
The company said that its revenues had fallen in large part as a result of problems producing the iPhone Pro and Pro Max.
It had already warned that the production issues – related to Covid shutdowns in China – were likely to hit sales. And customers eager to buy phones have seen them cause issues actually getting hold of them, with deliveries sometimes taking weeks.
But Apple says those issues are now behind them and that production has returned to normal.
While striking an optimistic tone on sales of services and iPhones, chief Tim Cook did say however that an uncertain economy is expected to hurt categories like gaming and digital advertising.
Overall, Apple‘s leaders tried to reassure investors that despite the firm being buffeted by up-and-down sales cycles for its flagship device and vulnerable to supply chain shocks, the world’s largest listed company remains on a steady - if somewhat slower - rise. And in the immediate aftermath of some of the company’s worst financial results in years, at least some investors seemed to give Cook the benefit of the doubt, imposing only modest share price declines.
For the just-ended quarter, Apple‘s profits missed Wall Street expectations for the first time since 2016, dragged down by iPhone sales falling for the first time since 2020.
The stock was down about 2% after Chief Financial Officer Luca Maestri said that iPhone sales were likely to improve compared with the quarter ended Dec. 31. That did not quite erase a 3.7% gain during regular trade.
Amazon.com and Alphabet also fell about 4% after reporting results. They also had gained during regular trade. SALES, PROFITS MISS EXPECTATIONS Apple sales fell 5% to $117.2 billion and were down in every part of the world in the quarter. Sales from each product category dropped, except for gains in services and iPads. Earnings per share were $1.88.
Analysts had expected sales of $121.1 billion and profits of $1.94 per share, according to IBES data from Refinitiv. In an interview, Cook told Reuters that the production disruptions that plagued Apple‘s key quarter were now over.
“Production is now back where we want it to be,” he said.
During its fiscal first quarter ended Dec. 31, Apple faced a wave of challenges that left Wall Street expecting lower sales. Chief among those were supply chain pressures when COVID lockdowns at a production facility in Zhengzhou, China, slowed production of iPhone 14 Pro and Pro Max devices, both premium priced models that would traditionally help drive Apple‘s margins higher.
Cook said the lockdowns in China created a dual challenge where both supply and demand were constrained, with greater China sales falling 7% to $23.9 billion.
But product snags are behind Apple now. “They still feel demand will be soft, but they’ve rectified production, which means that if demand does go up unexpectedly, they can ramp” to meet it, said Ben Bajarin of analyst firm Creative Strategies.
Additional reporting by Reuters