Apple stated on Thursday that its revenue for the first three months of the year declined 3% to $94.8 billion as consumers cut back on purchases of smartphones and laptops due to impending recession fears.
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Although the company’s revenue was marginally higher than what Wall Street had anticipated, it still represented the iPhone maker’s second consecutive quarterly revenue decline. Apple’s net income decreased by more than 3% from the same quarter last year to a little under $24.2 billion.
Apple (AAPL) announced share buybacks of up to $90 billion in an effort to placate investors. Following the results, Apple (AAPL) shares increased by slightly more than 1% in after-hours trading on Thursday.
There were some encouraging aspects of the report despite the ongoing revenue reduction.
Despite the difficult macroeconomic environment, Apple CEO Tim Cook claimed that the March quarter saw “record iPhone [sales]” and that “the installed base of active devices reached an all-time high.”
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Apple also reported record-breaking quarterly service sales of $20.9 billion. A less cyclical revenue source for Apple than hardware sales is the company’s services division, which includes Apple Music and Apple TV+. On Thursday’s analyst call, CFO Luca Maestri informed the audience that Apple now has more than 975 million paid subscriptions across all of its services, an increase of 150 million from the previous year.
Following a spike in sales earlier in the pandemic, Apple’s most recent quarterly earnings report coincides with a sharp global decline in PC and smartphone sales.
According to Gartner data, global PC shipments decreased 30% in the first quarter of 2023 compared to the same period last year. Separate data from market research firm IDC show that worldwide smartphone shipments fell 14.6% in the most recent quarter.
Nevertheless, the firm’s better-than-anticipated sales report “suggests that Apple’s premium smartphone business may be insulated from concerns about deteriorating consumer confidence and a worsening macroeconomic outlook,” said Investing.com senior analyst Jesse Cohen.
A carefully awaited earnings season for Silicon Valley amid general economic unease came to an end with Apple’s report on Thursday. All five Big Tech companies outperformed Wall Street forecasts, but the figures present an unfavorable image of the sector right now.
Apple and its rivals previously seemed to have endless growth potential. Now, these companies are having difficulty increasing their sales and profits—or are even reporting declines.
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On Thursday, Cook shared his opinions on artificial intelligence, which many significant tech companies have prioritized recently.
There are a number of concerns that need to be resolved, and I do believe it’s crucial to tackle these matters deliberately and thoughtfully. but the potential is undoubtedly intriguing, and we’ve clearly made great strides in integrating AI,” Cook said of our products and services. We think AI is huge, and we’ll keep thoughtfully incorporating it into our products. In the near future, we will meet dire consequences if steps are not taken today.
Apple needs to mitigate risks, and face challenges right now.