Analysts say Apple may report first quarterly revenue decline in almost 4 years
Apple is expected to report its first quarterly revenue decline in nearly 4 years after strict COVID-19 containment measures in China hit the economy and protests. related has stopped iPhone production at its largest supplier, Foxconn.
Investors will be looking for details on how CEO Tim Cook is trying to boost demand in a weak economy that has led to mass layoffs in the tech industry, a move Apple has so far been avoided thanks to thrifty recruitment during the pandemic.
“With supply chain challenges largely normalized, we now believe Apple is entering a period of slowing demand due to macro factors,” said Cowen analyst Krish Sankar. Iphone The unit will go on sale in 2023.
According to Refinitiv, the world’s largest public company is expected to report on Thursday that iPhone sales fell about 5% in its most important holiday quarter. The last time iPhone sales dropped was between August and October 2020, a few months after the COVID-19 pandemic.
UBS analysts expect iPhone sales in the United States to outperform China and Europe, as economies reel from the impact of COVID-19 and the Russia-Ukraine war.
BofA analyst Wamsi Mohan said some demand for iPhones is likely to be pushed into the current quarter after supply constraints in the first quarter and some demand loss due to holiday shortages. ceremony.
The services business, a key growth driver for the company and home to Apple’s music and video streaming services, is set to post the slowest revenue growth during the holiday quarter – Another consequence is that consumers limit spending.
BACKGROUND
Disruptions at the world’s largest iPhone factory in Zhengzhou, China prompted a rare warning from Apple in November and limited supplies of higher-end iPhone 14 models in what is normally the first quarter. the company’s biggest sales, supported by product launches and holidays.
Greater China, including Hong Kong, is key to Apple’s fortunes, contributing about a fifth of annual revenue. The Cupertino, California-based tech giant in 2019 lowered its total sales forecast due to the economic slowdown in the country following the Sino-US trade war.
However, analysts expect a much faster recovery this time around as factories in China have restarted and Apple has diversified its manufacturing operations with factories in India.
“Comments from luxury goods companies suggest that China is recovering quickly, which means that China’s iPhone sales in Q3 will be better than expected,” said Evercore ISI analysts. “.
© Thomson Reuters 2023