Technology: Apple sales fall as iPhone sales decline

Technology: Apple sales fall as iPhone sales decline

The decline in iPhone business at the beginning of this year was expected – but Apple is also keeping a low profile for the current quarter. The stock market is still satisfied with the group.

After a decline in sales at the beginning of the year, Apple is promising early announcements regarding artificial intelligence. The company sees great opportunities in this area and will say more about it in the coming weeks, emphasized Apple boss Tim Cook.

New iPad models are expected to be presented on May 7th, and the WWDC developer conference will take place at the beginning of June with an outlook on future functions for Apple devices. Apple has been using AI functions for years, including in the cameras of its iPhones. However, when it comes to so-called generative AI, which can generate digital content itself, the company is said to be lagging behind pioneers such as the ChatGPT inventor OpenAI in the industry.

Apple waives iPhone usage rate forecast

In the last quarter, weaker iPhone sales pushed Apple’s consolidated sales down. For the current quarter, however, the group predicted a sales increase in the low single-digit percentage range.

What is striking is that the group promised double-digit growth in the services and iPad tablets business, but there was no forecast for the iPhone. The iPhone is by far Apple’s most important product, which also boosts sales in other areas.

Apple sweetened the numbers for investors by announcing share buybacks worth up to $110 billion – the largest program of its kind to date. The share price rose by a good six percent in after-hours trading.

Fewer sales as a long-term consequence of the corona pandemic

The declines in the last quarter were not unexpected – and were also a late consequence of the corona pandemic. In the same quarter last year, pent-up demand for the iPhone 14 Pro drove up sales – by almost five billion dollars, according to Apple estimates.

The reason: Many interested parties were unable to buy the top model during the 2022 Christmas season because corona lockdowns in China slowed production. Now all versions of the current iPhone 15 were available normally during the past holiday quarter. As a result, business was a little quieter at the start of 2024, as usual.

iPhone sales fell by around 10.5 percent year-on-year to $45.96 billion, as Apple announced after the US stock market closed on Thursday. That was just below analysts’ average expectations.

More competition in China

Wall Street is also focusing on the China business, where the iPhone, among other things, has recently felt more intense competition from local brands, including a Huawei group that has been resurgent there. Apple revenues in the region fell by eight percent to just under $16.4 billion. That was better than many market observers expected.

Cook emphasized that without the 14 Pro effect, the iPhone business would have grown in mainland China – and that homework would have to be done on other products. Apple recorded a year-on-year increase in sales in its services business and Mac computers. The iPad, on the other hand, saw a significant decline. Apple did not provide any figures for the Vision Pro computer glasses, which were launched in the USA in February.

Apple must allow alternative app stores in the EU

Overall, group sales fell by four percent year-on-year to $90.75 billion. The group still exceeded the expectations of analysts, who had expected an average turnover of around $90 billion. Profit fell by a good two percent to around 23.64 billion dollars (22 billion euros).

When asked about the consequences of the app store restructuring in the EU because of the DMA digital law, Cook said it was still too early to assess this. Apple had to allow alternative app stores for the iPhone in March. The group sees this as a security risk for users that they want to minimize.

At the same time, with the innovations, Apple could avoid part of the previous taxes of 15 or 30 percent of expenditure on apps, subscriptions and other digital purchases. The group signaled to the stock exchange three months ago that it was not about enormous amounts: Apple generates around seven percent of its app store revenue in the EU, said CFO Luca Maestri.

Source: Stern

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