Apple's stock falls as earnings show another revenue decline, China pressure
By Emily Bary
Guidance for 'similar' holiday-quarter revenue relative to a year ago underwhelms expectations
Apple Inc. continued its streak of revenue declines into a fourth consecutive quarter, beating overall sales expectations but coming up short in China.
The company had seen revenue fall on a year-over-year basis during each of the previous three quarters, and it posted $89.5 billion for the fiscal fourth quarter Thursday, down from $90.1 billion a year before. Analysts were modeling $89.3 billion.
Will Apple (AAPL) be able to generate revenue growth in the holiday quarter? Management left that up in the air, with Chief Financial Officer Luca Maestri saying that the company expects a "similar" revenue total in the December quarter relative to a year ago.
That guidance didn't seem to match Wall Street's hopes. Consensus expectations were for $123.1 billion in December-quarter revenue, whereas the company posted $117.2 billion on the top line in that same period a year before.
Net income for the September quarter was $23.0 billion, or $1.46 a share, compared with $20.7 billion, or $1.29 a share, a year before. Analysts were looking for $1.39 a share in earnings.
Apple shares were off 3% in late trading following the earnings call.
While the company expects iPhone revenue to grow on a year-over-year basis, iPad and wearables revenue could "decelerate significantly from the September quarter due to a different timing of product launches," according to Maestri.
He noted that last year's December quarter benefited from an extra week, while this year's could see a 1-percentage-point negative impact from foreign exchange.
For the September quarter, Apple (AAPL) reported iPhone revenue of $43.8 billion, up from $42.6 billion a year before, matching the FactSet consensus. The September quarter included just over a week's worth of sales of the new iPhone 15 lineup, which came out amid investor concerns about spending trends and China competition.
Overall Greater China revenue came in at $15.1 billion relative to $15.5 billion a year before, whereas analysts were projecting $16.8 billion.
Chief Executive Tim Cook said on the earnings call that while the iPhone business hit a September-quarter revenue record in mainland China, Macs and iPads weighed on performance as year-ago numbers benefited from pent-up sales following earlier factory disruptions.
See also: Block makes progress on profits and sets big earnings goal, sending stock higher
Overall Mac revenue fell to $7.6 billion from $11.5 billion a year earlier, while iPad revenue dropped to $6.4 billion from $7.1 billion. The FactSet consensus was for $8.5 billion and $6.2 billion, respectively.
While Maestri called out the tough comparisons to a year-earlier period driven by pent-up demand, he also noted "challenging market conditions" for the Mac.
Wearables, home and accessories revenue came in at $9.3 billion, down from $9.7 billion a year before. Analysts were looking for $9.5 billion.
The company saw services revenue grow to $22.3 billion from $19.2 billion and exceed the FactSet consensus, which was for $21.4 billion.
"From a category standpoint, literally, we set records in each one of the big categories," Maestri said of the services business. "We had all-time records for App Store, for advertising, for cloud, video, Apple Care, payments and a September-quarter record for music."
The stock is up 36% so far this year, while the Dow Jones Industrial Average DJIA has gained about 1%.
-Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
11-03-23 0406ET
Copyright (c) 2023 Dow Jones & Company, Inc.-
What’s Happening in the Markets This Week
-
Worst-Performing Stock ETFs of the Quarter
-
Q3 in Review and Q4 2024 Market Outlook
-
Top-Performing Stock ETFs of the Quarter
-
September Jobs Report Forecasts Show Moderate Hiring Gains
-
Port Strike a Headache for Shippers but a Potential Tailwind for Certain US Transport Stocks
-
13 Charts on Q3′s Roller-Coaster Rally for Stocks and Bonds
-
5 Stocks to Buy Instead of Overpriced US Equities
-
3 Dividend Stocks for October 2024
-
Consumer Defensives: Despite Angst, Thirsty Investors Have Names to Pursue
-
Industrials: Many Stocks Overvalued After Q3 Outperformance
-
Basic Materials: Despite Index Rise, We See Multiple Long-Term Opportunities
-
What the Election Could Mean for Big Tech Stocks
-
3 Lessons From Recent Stock Market Drama
-
Consumer Cyclicals: Even Amid Moderating Consumer Spending, We See Discounts
-
Healthcare: Valuations Look Fair Overall, With Select Industries Still Undervalued