Apple’s quarterly iPhone sales fall 10%, but stock price jumps thanks to dividends and share buybacks
Apple on Thursday unveiled its biggest quarterly decline in iPhone sales since the start of the pandemic, deepening a crisis that is increasing pressure on the forward-thinking company to spruce up its products with more artificial intelligence.
The 10% year-over-year decline in iPhone sales for the January-March period is the latest sign of weakness for a product that generates the bulk of Apple’s revenue. This is the biggest drop in iPhone sales since the July-September 2020 period, when production bottlenecks caused by factory shutdowns during the pandemic led to a delay in the model’s release of that year.
The current iPhone slowdown is the main reason why Apple’s revenue for the most recent quarter fell 4% from last year, to $90.8 billion. This is the fifth consecutive quarter that Apple’s revenue has declined from the previous year. Apple’s profit during the most recent quarter totaled $23.64 billion, or $1.53 per share, down 2% from last year.
But Apple’s revenue and earnings per share were slightly better than analysts forecast, according to FactSet Research. Apple also predicted that its revenue for the April-June quarter would increase slightly from last year, ending the recent erosion streak.
Part of the iPhone’s deterioration in the first three months of the year is due to a surge in sales during the same period last year, when Apple said it was responding to the Pent-up demand caused by delivery delays due to the pandemic.
Even though it’s stumbling slightly, Apple remains one of the most successful companies in the world. The Cupertino, Calif., company hammered home that point by announcing a 4% increase in its quarterly dividend to 25 cents per share. The company also pledged to spend $110 billion buying back its own shares, a move welcomed by investors but one that could fuel criticism that Apple spends more money feeding Wall Street than creating more valuable products. innovative.
Buoyed by the dividend increase and share repurchase commitment, Apple shares rose nearly 7% in extended trading after the news. The stock price has fallen 10% since the start of the year, wiping out about $300 billion in shareholder wealth.
Although investors have been dismayed by declining iPhone sales, they are also concerned that Apple is losing its edge as other tech giants such as Microsoft and Google race toward the top tech spot of artificial intelligence that is expected to reshape industry and technology.
The latest quarterly report “leaves no room for doubt about Apple’s current situation,” said Thomas Monteiro, an analyst at Investing.com. “More than ever in the last decade, businesses need new products and solutions. »
Apple is expected to unveil more AI services in June at an annual conference showcasing the next version of its software for iPhone and Mac computers.
“We believe in the transformative power and promise of AI and we believe we have advantages that will differentiate us in this new era,” Apple CEO Tim Cook assured analysts at a conference Thursday, while promising that more details would be announced soon.
Weak sales in China were again a factor last quarter, with revenue in that region falling 8% from last year to $16.37 billion as manufacturers Competing smartphones have been gaining ground in one of the company’s largest markets. Even so, analysts expected an even bigger sales decline in the results, providing some relief to investors.
Apple also had some bright spots in the most recent quarter, notably in its services division, which saw revenue increase 14% from the previous year to $23.87 billion.
The division derives a significant portion of its revenue from a lucrative deal that makes Google the search engine that automatically answers queries on the iPhone — an arrangement that is at the center of an antitrust lawsuit now winding down with oral arguments finals in Washington this week. .
Commissions collected on digital transactions in iPhone apps are also a major source of revenue within Apple’s services division, an area targeted by a U.S. Justice Department lawsuit alleging the company operates an illegal monopoly which blocks competition to the detriment of consumers.
The case is expected to take several years to resolve, but European regulators are already forcing Apple to allow more alternatives to its proprietary iPhone app store under the Digital Markets Act.
yahoo
