Tag: huawei

Apple on Thursday forecast a drop in iPhone sales and targeted overall revenue $6 billion (roughly Rs. 49,714 crore) below Wall Street expectations as its China business took a hit.

This overshadowed overall fiscal first-quarter sales and profit that beat analysts’ targets, powered by iPhone growth, sending Apple shares down 3 percent in after-hours trade.

The results confirmed some analysts’ concerns that the company’s signature product is losing ground in the key Asian market where consumers are buying foldable phones and phones from Huawei, powered by a China-made chip.

“China is the most competitive smartphone market in the world, and that hasn’t changed,” Apple CEO Tim Cook told Reuters in an interview. He said iPhone sales there were down “mid-single digits” in the December quarter, when accounting for currency exchange rates.

“In China, Apple is facing more competitive challenges not only because of Huawei but also because of foldables, which is a very popular and fast-growing segment in China – and as we all know, Apple does not have a foldable device – yet,” said IDC analyst Nabila Popal.

Apple said sales in China in the December quarter were $20.82 billion (roughly Rs. 1,72,509 crore), missing analyst estimates of $23.53 billion (roughly Rs. 1,94,951 crore), according to LSEG data.

Revenue in the current quarter will be at least $5 billion (roughly Rs. 41,426 crore) less than a year ago, when the company sold iPhones rapidly to replenish inventories drawn down by COVID-related factory shutdowns, Apple Chief Financial Officer Luca Maestri told analysts on a conference call.

Maestri’s comments implied a revenue forecast of about $90 billion (roughly Rs. 7,45,681 crore) and iPhone sales of around $46 billion (roughly Rs. 3,81,126 crore) for the fiscal second quarter that ends in March. Wall Street expected nearly $96 billion (roughly Rs. 7,95,393 crore) in revenue and iPhone sales of $50 billion (roughly Rs. 4,14,281 crore). They were $51 billion (roughly Rs. 4,22,568 crore) in the 2023 quarter.

That would make it the company’s worst fiscal second quarter of iPhone sales since widespread COVID lockdowns in March 2020.

“The drag would be China – and it has everything to do with their seasonality, and the elongated replacement cycle,” said Ben Bajarin, CEO of research firm Creative Strategies.

“Regardless of what happens, (a drop in) year-over-year iPhone sales would be more of a concern than a quarter.”

For its fiscal first quarter ended December 30, Apple reported sales of $119.58 billion and profit of $2.18 per share, both above analyst expectations of $117.91 billion and $2.10 per share.

Sales of iPhones hit $69.70 billion in the quarter, growing 6 percent to beat analyst expectations of $67.82 billion, on the strength of its iPhone 15 lineup, which includes devices capable of capturing three-dimensional video for the Vision Pro headset being released this week. Apple’s total installed base of devices hit 2.2 billion, up from 2 billion a year ago.

“We had particularly strong double-digit growth on iPhone in emerging markets outside of China,” Cook said.

‘Huge opportunity’

Where Apple’s results disappointed, two other tech heavyweights, Amazon.com and Facebook owner Meta Platforms, reported quarterly results on Thursday which led to jumps in their share prices.

Microsoft in January eclipsed Apple as the world’s most valuable company, with investors viewing Apple as lagging in the AI race among tech heavyweights.

Apple has rarely discussed generative AI but on Thursday Cook said on the conference call that it was a “huge opportunity” and there was “a lot of work going on internally” but that he did not plan to discuss it publicly until later this year.

In the rest of Asia beyond China and Japan, Apple’s sales hit $10.16 billion, above analyst estimates. Cook said that iPhone sales hit an all-time high in South Korea, home to longtime rival Samsung Electronics.

The biggest growth area for Apple during its fiscal first quarter was its services business, which includes the Apple TV+ service as well as music, iCloud storage and the App Store, and which rose 11 percent to $23.12 billion in sales, slightly below analyst expectations.

Apple’s App Store also faces a challenge in Europe, where a new law that takes effect in March will allow developers to skip paying commissions to Apple and place alternative app stores on the iPhone.

Apple’s first-quarter Mac sales were up slightly to $7.78 billion, in line with analyst expectations. Sales of iPads were down 25 percent to $7.02 billion, a little behind Wall Street’s target.

Apple’s wearables segment, which includes its AirPods and Apple Watch sales, fell to $11.95 billion after company executives had warned of weak demand, just enough to top analysts’ targets

The company’s Vision Pro headset will be included in the segment in subsequent quarters, though analysts do not expect it to bring meaningful revenue for several years.

Several Apple Watch models have been at the center of a legal dispute with medical device maker Masimo and were briefly pulled from shelves before Apple removed a blood-oxygen monitoring features to comply with legal rulings and keep selling the devices.

© Thomson Reuters 2024