iPhone Sales Help Apple Beat Q4 Estimates, Holiday Forecast Disappoints Amid Weak iPad, Wearables Demand

Apple Chief Executive Tim Cook also insisted that the company's new iPhone 15 models were doing well in China.

By Reuters | Updated: 3 November 2023 13:14 IST

iPhone Sales Help Apple Beat Q4 Estimates, Holiday Forecast Disappoints Amid Weak iPad, Wearables Demand

Photo Credit: Reuters

Sales in Apple's wearables segment fell 3 percent to $9.32 billion

Highlights

Apple’s sales for Q4 fell roughly 1 percent to $89.50 billion
iPhone 15 Pro and Pro Max devices are facing supply constraints
iPhone sales were $43.81 billion in the fourth quarter

Apple on Thursday gave a sales forecast for the holiday quarter that missed Wall Street expectations, hurt by weak demand for iPads and wearables, sending its shares down about 3 percent in after-hours trading. Chief Executive Tim Cook insisted that the company's new iPhone 15 models were doing well in China, seeking to ease Wall Street worries that Apple was losing market share to a resurgent Huawei and other local smartphone sellers. Apple's revenue from China dipped 2.5 percent overall in the fiscal fourth quarter ended September 30, though Cook said it grew after accounting for foreign-exchange rates.

Chief Financial Officer Luca Maestri told analysts on a conference call that sales for the current quarter, which includes the Christmas holidays and when Apple typically has its biggest sales of new iPhone models, will be similar to the previous year. Wall Street had expected a forecast for a rise in sales of 4.97 percent to $122.98 billion (roughly Rs. 10,23,790 crore).

Apple shares, which have risen 37 percent so far this year, dropped 3.4 percent after-hours, following the forecast.

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Maestri said Apple expects to have higher iPhone sales for the fiscal first quarter, even though this year's holiday quarter has one fewer week of sales than the year-ago.

"I'd say it was surprising to see how confident Tim Cook was on future China performance given the many potential geopolitical challenges that we know exist for that market," said Bob O'Donnell, chief analyst at TECHnalysis Research.

Apple on Thursday reported sales and profit for the fiscal fourth quarter that beat Wall Street expectations, helped by an uptick in iPhone sales and a $1 billion (roughly Rs. 8,325 crore) boost to services revenue that offset large drops in Mac and iPad sales.

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Cook said the company's new high-end handset models - the iPhone 15 Pro and Pro Max devices - are facing supply constraints.

The Cupertino, California-based company has navigated a global smartphone slump better than many of its rivals, but faces an uneven economic recovery in China, a key market.

"While we believe investors should breathe a sigh of relief because sales and profits both exceeded expectations, the upside was small and we were concerned to see weak sales from China," DA Davidson analyst Tom Forte said.

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Apple said sales for the most recent quarter fell roughly 1 percent to $89.50 billion (about Rs. 7,45,130 crore), but beat analyst estimates of $89.28 billion (about Rs. 7,43,307 crore), according to LSEG data. Net income rose about 11 percent. Profit per share of $1.46 beat analyst expectations of $1.39 per share, according to LSEG.

Apple is facing tougher competition in the smartphone market this year as Huawei Technologies returns to the field with new phones powered by Chinese-made chips after being all but shut out of the market for several years by US government trade curbs.

Apple's sales in China fell to $15.08 billion (roughly Rs. 1,25,544 crore) from $15.47 billion (roughly Rs. 1,28,791 crore)in the fourth quarter a year ago. Cook said that after accounting for foreign-exchange rates, Apple's business in China grew year-over-year, driven by iPhone sales and services revenue.

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"In mainland China, we set a quarterly record for the September quarter for iPhone," Cook told Reuters. "We had four out of the top five best-selling smartphones in urban China."

Cook said Apple was "working hard to manufacture more" iPhone 15 Pro and Pro Max devices. "We do believe that later this quarter, we'll reach a supply-demand balance."

For now, the iPhone remains Apple's biggest seller. Sales were $43.81 billion (roughly Rs. 3,64,732 crore) in the fourth quarter, in line with analyst expectations, according to LSEG data.

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"We expect its performance to further improve in (Apple's fiscal first quarter) as the supply issues of the top Pro and Pro Max models will be resolved by then," said IDC analyst Nabila Popal. "Demand across regions continues to show preference for the most premium models, and we expect an even larger proportion" of those models this year than last year, she said.

The personal computer market is also expected to fare better in the coming year. Earlier this week, Apple rolled out new Mac machines.

Still, Mac sales slumped by a third to $7.61 billion (roughly Rs. 63,355 crore) and iPad sales declined 10 percent to $6.44 billion (roughly Rs. 53,615 crore), compared with expectations of $8.63 billion (roughly Rs. 71,847 crore) and $6.07 billion (roughly Rs. 50,534 crore), respectively.

Sales in Apple's wearables segment, which includes the Apple Watch and AirPods, fell 3 percent to $9.32 billion (roughly Rs. 77,591 crore), short of estimates of $9.43 billion (roughly Rs. 78,507 crore), according to LSEG data.

Apple has faced several quarters of declining sales of Macs and iPads, and the fourth quarter continued that trend.

Sales in Apple's services segment, which includes Apple TV+ and which recently closed a deal with global soccer superstar Lionel Messi, rose 16 percent to $22.31 billion (roughly Rs. 1,85,748 crore), compared with analyst estimates of $21.35 billion (roughly Rs. 1,77,755 crore).

© Thomson Reuters 2023

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iPhone 15

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Big upgrades over the 14
Excellent ergonomics, build quality
Very good all-round performance
Apple ecosystem benefits

Bad
Relatively slow charging
Expensive
Still a 60Hz display

Read detailed Apple iPhone 15 review

Display 6.10-inch

Processor Apple A16 Bionic

Front Camera 12-megapixel

Rear Camera 48-megapixel + 12-megapixel

RAM 6GB

Storage 128GB, 256GB, 512GB

OS iOS 17

Resolution 1179x2556 pixels

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Apple iPhone 15 Plus

KEY SPECS
NEWS

Display 6.70-inch

Processor Apple A16 Bionic

Front Camera 12-megapixel

Rear Camera 48-megapixel + 12-megapixel

RAM 8GB

Storage 128GB, 256GB, 512GB

OS iOS 17

Resolution 1290x2796 pixels

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Apple iPhone 15 Pro

KEY SPECS
NEWS

Display 6.10-inch

Processor Apple A17 Pro

Front Camera 12-megapixel

Rear Camera 48-megapixel + 12-megapixel + 12-megapixel

RAM 8GB

Storage 128GB, 256GB, 512GB, 1TB

OS iOS 17

Resolution 1179x2556 pixels

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Apple iPhone 15 Pro Max

REVIEW
KEY SPECS
NEWS

Design
Display
Software
Performance
Battery Life
Camera
Value for Money

Good
Excellent display
USB Type-C
AAA gaming
Excellent all-round performance
Good primary and telephoto camera
Customisable Action Button

Bad
Gets hot quickly when stressed
Slow wired charging
Expensive

Read detailed Apple iPhone 15 Pro Max review

Display 6.70-inch

Processor Apple A17 Pro

Front Camera 12-megapixel

Rear Camera 48-megapixel + 12-megapixel + 12-megapixel

RAM 8GB

Storage 256GB, 512GB, 1TB

OS iOS 17

Resolution 1290x2796 pixels

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