Apple posted its first quarterly revenue drop in four years on Thursday due to pandemic restrictions on its China factories. The company reported total sales of $117 billion for the October-December period, a 5% decline from the previous year. This marks the first year-over-year decrease in quarterly revenue since the January-March period in 2019. Despite the downturn, Apple’s earnings of $30 billion or $1.88 per share still showed a significant drop of 13% from the previous year. The results missed analysts’ target of $1.94 per share.
Investors initially drove down Apple’s stock by nearly 5% in Thursday’s extended trading, but management remarks during a conference call with analysts raised hopes and reduced the decrease to less than 1%. The company’s stumble came during a time of renewed investor optimism in the tech sector, with the Nasdaq composite index showing a 17% increase so far this year. However, with Google also disclosing a decline in its digital ad sales, challenges are clear in the current economic climate of slowing growth and elevated inflation.
Despite the downturn, Apple has not signaled any intention to resort to mass layoffs, unlike its peers in technology such as Alphabet, Microsoft, Amazon, and Meta Platforms. Apple CEO Tim Cook emphasized the company’s long-term approach during the conference call, stating, “We manage for the long term, we invest in innovation and people.” Cook had warned of “increasingly difficult economic conditions” heading into the holiday season in late October.
The pandemic restrictions in China contributed to an 8% decrease in iPhone sales from the previous year, totaling $65.8 billion in the most recent quarter. However, Cook indicated that Apple’s supply headaches are now over and that production is back where they want it to be. The company also disclosed that it now has over 2 billion devices in active use for the first time, which will help Apple sell more digital subscriptions and ads and fuel long-term revenue growth.
In conclusion, Apple’s first quarterly revenue drop in four years highlights the challenges faced by the tech sector in the current economic climate of slowing growth and elevated inflation. Despite the downturn, Apple remains optimistic about the long-term outlook and continues to invest in innovation and people. The company’s strong track record and continued growth in active device usage bodes well for its future revenue growth.
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For Digital Products and Services: Maurisys Software.
