Sales down 5 percent: Apple’s biggest quarterly drop since 2016

Apple’s overall sales in the last quarter of last year were about 5% lower than in 2021. This is the first time since 2019 that the sales of Apple products face an annual decline. Apple CEO Tim Cook announced that three The main factor that leads to a drop in seasonal sales These include: a strong dollar, manufacturing issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment.

“As a third factor, I would cite the challenging macroeconomic environment, and I think you’re hearing that from everybody these days,” Cook told CNBC’s Steve Kovacs.

The company’s stock fell in trading as Apple didn’t earn as much as expected and posted weaker-than-expected quarterly profit and sales figures for many of its businesses. As a result, its overall sales decreased significantly during the holiday quarter.

Shares of Apple temporarily fell more than 4 percent during extended trading on Thursday, before rebounding after the tech giant provided information on its current-quarter outlook. The company’s data shows that the rate of decline in iPhone sales this season will be less than the holiday quarter.

Apple’s performance report compares to expectations

EPS: About $1.8 vs. $1.94 estimated, down 10.9% year-over-year
Revenue: $117.15 billion vs. $121.10 billion estimated, down 5.49% from last year
iPhone revenue: $65.78 billion vs. $68.29 billion estimated, down 8.17% from last year
Mac revenue: 7.74 billion dollars against the estimated 9.63 billion dollars, which has decreased by 28.66% compared to last year.
iPad revenue: $9.4 billion vs. $7.76 billion estimated, down 29.66% from last year
Other products revenue: $13.48 billion versus an estimated $15.23 billion, down 8.3% from last year.
Services revenue: $20.77 billion vs. $20.67 billion estimated, down 6.4% year-over-year
Gross margin: 42.96% against the estimated 42.95%

Apple did not provide guidance for the current quarter ending in March. The company hasn’t issued any guidance since 2020, and the primary reason was uncertainty caused by the pandemic. Analysts expect Apple’s national second quarter revenue to reach $98 billion.

However, Apple has predicted some things about the future of sales. CFO Luca Maestri announced that the decline in revenue for the quarter ending in March would be similar to the last quarter of last year. Maestri said that the service unit’s revenue is expected to take an upward trend, but the percentage of Mac and iPad sales will be lower than in the pre-Durqami period. Apple added that iPhone sales in the first quarter of this year will be less than the quarter ending in December.

The last quarter of last year was a stunning failure for Apple and the first time in seven years that it came out weaker than analysts expected. In fact, it was the second time since August 2017 that Apple’s quarterly sales fell by more than 3 percent.

In addition, this decline in revenue reflected the decline in Apple’s success over the past two years, driven by the need for new computers for work and virtual classrooms. It was Apple’s first annual revenue decline since 2019 and its biggest quarterly revenue decline since September 2016.

Cook told CNBC that Apple’s quarterly sales decline was partly due to the strong dollar. He added that the supply of iPhone 14 Pro and iPhone 14 Max decreased significantly during the last quarter of the last year. As a result, there were fewer phones to sell to customers and it did not keep up with demand. The iPhone’s primary assembly plant in China was also affected by the Covid quarantines during the last quarter of 2022, and production volumes were severely reduced.

Apple’s CEO said production is now back to safe levels. Cook explained that the challenging macroeconomic environment has affected sales of iPhones, Macs and wearables such as the Apple Watch. iPhone and Mac sales have decreased compared to last year. Sales of other Apple products, including headphones such as AirPods and wearables such as the Apple Watch, were also down 8 percent.

Cook said Mac sales declined because the final quarter of 2022 was not comparable to the same period a year earlier in terms of new and advanced laptop shipments.

Key points of Apple’s recent sales report for investors

This report clarified several important points for investors. Apple revealed that it has 2 billion active devices, including the iPhone, Mac, Apple Watch and other products, up from the 1.8 billion active devices it announced in January last year.

This number is important to investors because it speaks to the company’s global reach. Now, if Apple can earn money through services or other additional products, it is a positive thing.

Another positive point for Apple investors is the 6% growth in services sales, which exceeded analysts’ expectations.

Apparently, cloud services, payments including Apple Pay and Apple Card, and music are the main components of the service. Cook added that Apple employees are beta testing the buy-now-pay-later feature that will be part of the soon-to-launch service.

Apple is cutting costs and hiring, Cook said. But fortunately, unlike many competing technology companies, there will be no adjustment of the range force. He added: We also know that the situation we are in is not very favorable. So we cut costs. We are also cutting back on hiring and will be very careful about who we hire.