Struggles for Apple but Core Remains Strong

By Glenn Dyer | More Articles by Glenn Dyer

Apple might have struggled in a tough economic climate during the March quarter, but it still managed to beat Wall Street expectations as it managed to sell more iPhones than expected which seems to have satisfied investors.

As expected Apple revealed another $US90 billion for its ongoing buyback for2023 and a 4% lift in dividends to 24 US cents a share, the 11th yearly payout increase in a row.

The shares rose 1.9% in the afterhours market after dipping 1% in regular trading. The results were released after the close.

Apple reported $US24.16 billion in net income for the quarter down from $US25.01 billion last year. Overall revenue was down 3% from last year’s $US97.28 billion to $US94.98 billion for the second quarterly fall in a row.

The tech giant set an all-time record for services revenue during the period of $US20.97 billion, up from the $US19.8 billion a year earlier.

Revenue from sales of the iPhone jumped to $US51.33 billion from $US48.84 billion in the March, 2022 quarter.

Apple said the number of total subscriptions for all services reached 970 million globally.

“We are pleased to report an all-time record in Services and a March quarter record for iPhone despite the challenging macroeconomic environment, and to have our installed base of active devices reach an all-time high,” Tim Cook, Apple’s CEO said in a statement with the earnings release.

“We continue to invest for the long term and lead with our values, including making major progress toward building carbon neutral products and supply chains by 2030.”

Apple didn’t provide formal guidance, continuing its practice that dates back to 2020 and the start of the Covid-19 pandemic.

After the solid rise in iPhone revenues, Apple’s Mac and iPad businesses didn’t fare as well. The company had warned last quarter that both businesses would see declines, partially due to parts shortages, but revenues fell more than expectations.

Apple’s Mac business fell more than 31% to just over $US7.17 billion. But the same time last year Apple was still benefiting from the end of a pandemic boom in PC sales and a shift to its own chips that offer longer laptop battery life.

Revenue from iPads fell nearly 13% to $US6.67 billion.

Apple’s Services business includes monthly subscriptions, revenue from Apple’s App Store, warranties, and search licensing revenue from companies like Google. Apple reported a 5.45% annual increase in revenues, showing that the company’s highest-margin line of business continues to grow.

Apple’s wearables division, including Apple Watch and headphones such as AirPods, saw revenue drop 1% during the quarter, beating analyst forecasts. Last fall, Apple released a more expensive Apple Watch, called Ultra.

Apple’s greater China business, which includes Taiwan and Hong Kong in addition to the mainland, reported $US17.81 billion in sales, down from last year’s $US18.34 billion.

While sales shrunk in most regions that Apple services, they grew in its Asia Pacific region to $US8.11 billion (which includes Australia).

Cook was optimistic about Apple’s prospects in India. Cook visited India last month to open Apple stores and meet with politicians and the company is starting to make products there – especially iPhones and selling reconditioned iPhones into the market.

Its new deposit product with Goldman Sachs started midway through April, after the end of the quarter and any data on it will not be revealed until the second quarter report in August.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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