Apple Narrowly Tops Estimates

Apple Inc. reported third-quarter results that narrowly beat Wall Street estimates, easing concerns that supply chain snags and a shaky economy would ravage the tech giant’s sales, reports Bloomberg.

Revenue rose 2 per cent to US$83 billion in the period, which ended June 25, compared with an average analyst prediction of US$82.8 billion. Earnings amounted to US$1.20 a share, topping the US$1.16 projection.

Apple’s iPhone and iPad sales fared better than expected during the quarter, though other products -- including Macs and wearables -- fell short of projections. Services, a key growth area for Apple, narrowly missed estimates.

Still, the iPhone numbers suggest that Apple is weathering a slowdown in smartphone spending. The company also has shown it can navigate supply chain constraints fueled in part by Covid-19 shutdowns in China. In April, Apple warned that the problems would erase US$4 billion to US$8 billion from third-quarter revenue.

Though it’s faring better than some tech peers, Apple has grown more cautious as it confronts a sputtering economy. The iPhone maker is planning to slow hiring and spending for some teams in 2023, Bloomberg reported earlier this month. Before releasing its results Thursday, Apple’s stock had fallen about 11 per cent this year, slightly outperforming the S&P 500 Index.

Apple also had little in the way of new products to lure customers in recent months. The company released an updated iPhone SE back in March and is expected to launch fresh iPhones in September, missing the quarter that just ended. 

Even so, that product generated US$40.7 billion last quarter, beating estimates of about US$39 billion.

Qualcomm Inc. added to investors’ concerns about the smartphone market on Wednesday, when the chipmaker said consumers’ appetite for the devices had slowed. But the company said demand was particularly weak for low-end and mid-tier phones running Android, rather than the iPhone.

Last quarter’s sales from digital services like iCloud, AppleCare, Apple TV+ and Apple Music climbed 12 per cent to US$19.6 billion during the period. That made it Apple’s fastest-growing category, but the division came up shy of Wall Street predictions of about US$19.7 billion.

Apple’s wearables, home products and accessories -- the division that includes its smartwatch, HomePod, AirPods and Beats headphones -- had sales of US$8.08 billion last quarter. Wall Street had called for about US$8.8 billion. 

Apple generated US$7.38 billion from the Mac, badly missing predictions of about US$8.45 billion. The company launched new MacBook Pro and MacBook Air models in July, but those didn’t contribute to the latest results because the quarter ended in June. That means many consumers probably stopped buying the old versions of the products -- Apple’s two most popular Macs -- hurting that category.

The Cupertino, California-based company is planning a slew of new Macs over the next several months, including high-end MacBook Pros, an iMac, upgraded Mac minis and a revamped Mac Pro, Bloomberg has reported.