Apple Posts First Quarterly Revenue Drop Since 2016 Amid Weak iPhone Sales During Holiday Season

Despite the quarterly downturn, Apple hasn’t signaled any intention to resort to mass layoffs — a stark contrast to its peers in technology.

By Associated Press | Updated: 3 February 2023 10:14 IST

Apple Posts First Quarterly Revenue Drop Since 2016 Amid Weak iPhone Sales During Holiday Season

Photo Credit: Apple

Apple disclosed that it now has more than 2 billion iPhones, iPads, Macs and other devices in active use

Highlights

Alphabet, Microsoft, Amazon and Meta have announced mass layoff plans
Apple's profit also eroded during the past quarter
China's Covid restrictions caused 8 percent decrease in iPhone sales

Apple on Thursday posted its first quarterly revenue drop in nearly four years after pandemic-driven restrictions on its China factories curtailed sales of the latest iPhone during the holiday season.

The company's sales of $117 billion (roughly Rs. 9,61,775 crore) for the October-December period represented a 5 percent decline from the same time in the previous year, a deeper downturn than analysts had projected.

It marks Apple's first year-over-year decrease in quarterly revenue since the January-March period in 2019 when sales also slipped 5 percent amid slowing iPhone demand and the fallout of a trade war with China that was being waged by then-President Donald Trump.

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Apple's profit also eroded during the past quarter, even though the Cupertino, California, company remained a pillar of prosperity. Earnings totaled $30 billion (roughly Rs. 2,46,609 crore), or $1.88 per share (roughly Rs. 150), a 13 decrease from the same time in the previous year. Those results also missed a target of $1.94 per share (roughly Rs. 160) set by analysts polled by FactSet Research.

Investors reacted to the letdown by initially driving down Apple's stock by nearly 5 percent in Thursday's extended trading. But management remarks made during a conference call with analysts raised hopes that Apple's disappointing performance may have been a mere hiccup, paring the decrease in the company's shares to less than 1 percent.

Apple's rare stumble came against a backdrop of renewed investor optimism about tech's outlook for this year, helping to spur a 17 percent increase in the sector's bellwether Nasdaq composite index so far this year.

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But now Wall Street seems likely to reassess things in light of Apple's latest results and ongoing worries about a potential recession in the wake of rising interest rates aimed at tamping down inflation, said Investing.com analyst Jesse Cohen.

With Google also disclosing a year-over-year quarterly decline in its digital ad sales on Thursday alongside Apple's disappointing performance, Cohen said it's clear there are “several challenges the tech sector faces amid the current economic climate of slowing growth and elevated inflation.”

Despite the quarterly downturn in its fortunes, Apple hasn't signalled any intention to resort to mass layoffs — a stark contrast to its peers in technology. Industry giants Alphabet, Microsoft, Amazon and Meta Platoforms have announced plans to jettison more than a combined 50,000 employees as they adjust to revenue slowdowns or downturns caused by people's lessening dependence on the digital realm as the pandemic has eased.

“We manage for the long term," Apple CEO Tim Cook told analysts during the conference call. “We invest in innovation and people.”

Cook had tried to brace investors for tougher sledding in late October when he warned of “increasingly difficult economic conditions” heading into the holiday season. Then, just a few days later, Apple cautioned that China's attempts to clamp down on the spread of COVID was affecting its production lines and would prevent meeting all the demand for the premium iPhone 14 models during the holidays.

That contributed to an 8 percent decrease in iPhone sales from the previous year to $65.8 billion (roughly Rs. 5,40,709 crore) in the most recent quarter.

Cook indicated Apple's supply headaches are now over, assuring analysts that “production is now back where we want it to be."

In another positive sign, Apple also disclosed that it now has more than 2 billion iPhones, iPads, Macs and other devices in active use for the first time. That is likely to help Apple sell more digital subscriptions and ads, helping to fuel long-term revenue growth.

Apple launched the iPad Pro (2022) and the iPad (2022) alongside the new Apple TV this week. We discuss the company's latest products, along with our review of the iPhone 14 Pro on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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iPhone 14

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Good overall performance
Great camera quality in daylight
iOS ecosystem and ease of use

Bad
Dated design and notch
Very similar to iPhone 13
Relatively slow charging
Expensive

Read detailed Apple iPhone 14 review

Display 6.06-inch

Processor Apple A15 Bionic

Front Camera 12-megapixel

Rear Camera 12-megapixel + 12-megapixel

Storage 128GB, 256GB, 512GB

OS iOS 16

Resolution 1170x2532 pixels

More Apple mobiles Apple mobiles price in India

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