Apple Misses the Street
Apple announced their 1st quarter financial results and as expected the company struggled during the holiday quarter. While Apple executives explained that the revenue and profit shortfall would have been mitigated but for the serious 800 basis point foreign exchange headwinds and the covid disruptions in China, the fact remains that Apple's revenue and profit not only did not meet the expectations but also declined year over year for the same quarter. It was a tough quarter with economic uncertainty, war, disease and consumer caution all impacting sales. On the other hand, Apple did post revenue of $117.2 billion and net quarterly profit of $30.0 billion which is not too shabby. This was, however; the worst Apple quarterly revenue decline in 6+ years!
Tim Cook said “As we all continue to navigate a challenging environment, we are proud to have our best lineup of products and services ever, and as always, we remain focused on the long term and are leading with our values in everything we do,” said Tim Cook, Apple’s CEO. “During the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base.”
As Tim said, Apple pointed out that they have reached the milestone of over 2 billion active devices which is simply phenomenal. If you are looking for any signs of Apple's continued health 2 billion devices is a good place to start. That means those devices may need accessories, upgrades or software and more folks in the Apple world ultimately will mean more sales.
Apple's iPhone sales were $65.78 billion vs. $71.63 billion in the 1st quarter last year. Tim Cook said that he thought that iPhone sales would have beat last year sales but for the disruptions to supply by the factory shutdowns due to covid in China. The Mac posted sales of $7.74 billion vs. $10.85 billion a year ago. Remember that last year the M1 MacBook Pros were introduced and were a hit so that decline can only be partially blamed on supply and economic issues. iPad was a bright spot with sales increasing with $9.4 billion in sales vs. $7.25 billion last year. Wearables were pretty strong with $13.48 billion in sales vs. $14.7 billion last year and services also shone with $20.78 billion of sales versus $19.5 billion last year.
Apple performed well and their main problem was they could not get enough of their flagship product (the iPhone) to mean the demand. That is a problem of the kind that Tim Cook and Apple are experts at solving. The fundamentals of the company remain incredibly strong and the leadership team is effective in reacting to the challenges. While it is too bad that Apple did not set yet another year over year record for sales and revenue I am glad that I didn't have to find another picture to show Apple creaming the analysts. Congrats to the Apple team for a strong quarter during very difficult times!