Apple shares fell in extended trading on Thursday after the company’s disappointing holiday sales forecast overshadowed a strong $23 billion quarterly profit and rising iPhone sales.
In the quarter ended Sept. 30, iPhone sales rose 2.8 percent, contributing to $89.50 billion in total revenue, including nearly $1 billion more in services sales than Wall Street reported expected.
Apple’s services segment, including Apple TV+, which recently signed a deal with global soccer superstar Lionel Messi, also saw revenue rise 16 percent to $22.31 billion, compared to analyst estimates of $21.35 billion. Dollar.
However, the results do not include the majority of sales of Apple’s latest iPhone 15 models, and the company’s forecast that sales for the holiday quarter would be around last year’s levels caused the stock to plunge.
Apple shares, which have risen 37 percent so far this year, fell 3.6 percent in after-hours trading after the company issued the forecast.
Apple shares fell in extended trading on Thursday after the company’s disappointing holiday sales forecast overshadowed a strong quarterly profit. Pictured: CEO Time Cook
In a conference call with analysts, Chief Financial Officer Luca Maestri said sales in the current quarter, when Apple typically has its biggest sales of new iPhone models, will be similar to last year.
Wall Street expected revenue to rise 4.97% to $122.98 billion.
Apple faced potential headwinds last month after the U.S. Commission on International Trade issued an order that would ban certain Apple watches from being imported into the U.S. over alleged patent infringement.
The order would take effect on December 26 unless it is overturned on appeal or Apple reaches an agreement with the patent holder to avert enforcement.
The Cupertino, California-based company also faces an uneven economic recovery in China, a key market for Apple.
Last quarter, revenue in China fell 2.5 percent, and CEO Tim Cook said the company’s new high-end phone models – the iPhone 15 Pro and Pro Max devices – were facing supply shortages.
“While we believe investors should breathe a sigh of relief as both sales and earnings beat expectations, upside potential was limited and we were concerned about weak sales from China,” said DA Davidson analyst Tom Forte.
Apple is facing stiffer competition in the smartphone market this year as Huawei Technologies returns to the market with new phones with chips made in China after being virtually shut out of the market for several years by U.S. government trade restrictions.
Apple shares, which have risen 37 percent so far this year, fell 3.6 percent in after-hours trading after the company issued the forecast
Apple’s sales in China fell to $15.08 billion from $15.47 billion in the fourth quarter of last year.
CEO Cook said Apple’s business in China grew year-on-year after accounting for foreign exchange rates, driven by iPhone sales and service revenue.
“In mainland China, we set a quarterly record for iPhone in the September quarter,” Cook told Reuters. “We had four of the five best-selling smartphones in urban China.”
Cook said Apple is “working hard to make more” iPhone 15 Pro and Pro Max devices. “We believe we will reach balance between supply and demand later this quarter,” he said.
Several global trends also work in Apple’s favor: Forecasters believe the smartphone market has bottomed out and could begin recovering in 2024.
Longer term, investors are waiting to see how Apple responds to the boom in generative artificial intelligence, in which systems can follow instructions in a human-like manner – an area that has attracted billions in spending from Microsoft and Alphabet’s Google.
Apple has said it is working on the technology and sees it as a way to improve a wide range of products.
The iPhone remains Apple’s biggest seller for the time being. According to LSEG data, the device’s fourth-quarter revenue was $43.81 billion, meeting analyst expectations of $43.81 billion.
The PC market is also expected to develop better in the coming year. Earlier this week, Apple launched new Mac devices.
Still, Mac sales fell by a third to $7.61 billion and iPad sales fell 10 percent to $6.44 billion, compared with expectations of $8.63 billion and $6, respectively .07 billion US dollars.
Sales in Apple’s wearables segment, which includes the Apple Watch and AirPods, fell 3% to $9.32 billion, falling short of estimates of $9.43 billion, according to LSEG data back.
Apple has faced declining sales of Macs and iPads in several quarters, and that trend continued in the fourth quarter.