Apple earnings a bright spot as inflation hits tech companies

By on
Apple earnings a bright spot as inflation hits tech companies

Apple has reported revenue and profit that topped Wall Street targets, one of the few bright spots in a tech sector battered by spending cutbacks due to inflation.

The company was saved by its oldest technology, its laptop computers, while its star, the iPhone, stumbled.

Although iPhone sales were not as strong as some analysts had targeted, they were still a record for the September quarter.

Mac sales of US$11.5 billion were far head of analyst estimates of US$9.36 billion.

Shares were trading down less than 1 per cent in after-hours trade.

Apple's results showed some resilience in the face of a weak economy and strong US dollar that has led to disastrous reports from many tech companies.

Overall, Apple said quarterly revenue rose 8 per cent to US$90.1 billion, above estimates of US$88.9 billion, and net profit was US$1.29 per share, topping with the average analyst estimate of US$1.27 per share, according to Refinitiv data.

"We did better than we anticipated, in spite of the fact that foreign exchange was a significant negative for us," said Chief Financial Officer Luca Maestri.

Minutes before Apple reported, Amazon added to tech sector misery, predicting a holiday profit slump that sent its shares down 20 per cent.

Apple's iPhone sales for the company's fiscal fourth quarter rose to US$42.6 billion, when Wall Street expected sales of US$43.21 billion, according to Refinitiv IBES.

By contrast, the overall global smartphone market dropped 9 per cent for the just-ended quarter, its third consecutive decline of the year, according to Canalys data.

Maestri said iPhone sales set a record for the September quarter, improving 10 per cent over the prior year's quarter and exceeding the company's forecast.

"The iPhone number is a hint of the turmoil and uncertainty in the market, but Apple has different ways to offset," said Runar Bjorhovde, a research analyst at market research firm Canalys.

JP Morgan analyst Samik Chatterjee had noted early lackluster demand for base models of the newly introduced iPhone 14s, but robust consumer appetite for the high-end devices, reflecting Apple's relatively affluent customer base.

He warned that weaker consumer spending could impact earnings next fiscal year.

Sales of Apple's Mac computers received a boost from this summer's introduction of redesigned MacBook Air and MacBook Pro laptops.

New iPads went on sale this week, including a Pro model refreshed with Apple's M2 chip.

Maestri said the robust sales also reflected a backlog of orders, caused by a prolonged shutdown at one of the factories that produces Macs, which the Apple was able to fill in the quarter.

The company reported sales of iPads were US$7.2 billion, compared with the average estimate of US$7.94 billion.

Apple wearables such as AirPods and other accessories notched sales of US$9.7 billion, slightly ahead of the Wall Street forecast of US$9.2 billion.

"Similar to iPhones, we expect the macro impacts to units to creep into the higher end at some point," wrote Barclays hardware analyst Tim Long ahead of the results.

Growth in the company's services business, which has buoyed sales and profits in recent years, saw a rise to US$19.2 billion in revenue, below the estimate of US$20.10 billion.

Maestri said Apple experienced softness in digital advertising, as have others in the sector.

"Like other major tech companies, even Apple is suffering from the negative impact of a worsening macro backdrop and ongoing supply chain woes, though it has done a better job of navigating through the challenging environment," Jesse Cohen, senior analyst at

In China, which has experienced a sharp economic slowdown, Apple reported fourth-quarter sales of US$15.5 billion.

That is a gain from the prior quarter, when Apple logged sales of US$14.6 billion.



Got a news tip for our journalists? Share it with us anonymously here.

Most Read Articles