Oct. 27 (Reuters) – Apple Inc. (AAPL.O) Revenues and profits beat Wall Street targets on Thursday, one of the few bright spots in a tech sector battered by inflation-driven spending cuts.
Forecasts for the holiday quarter were bleaker. Without providing specific numbers, Apple said revenue growth would fall below 8% in the December quarter, but didn’t go as far as Amazon.com AMZN.O, whose bleak holiday outlook sent its shares down 14%.
Apple shares initially dipped in after-hours trading, but rallied back into positive territory.
The Cupertino, Calif.-based tech giant was saved by its oldest technology, its laptops, while its star, the iPhone, stumbled.
Although iPhone sales weren’t as strong as some analysts had expected, they were still a record high for the September quarter. Mac sales of $11.5 billion were well above analysts’ estimates of $9.36 billion.
Apple’s results showed some resilience in the face of a weak economy and strong US dollar, leading to dire reports from many tech companies. Like Facebook Parent Meta (META.O) and Snap (SNAP.N), Apple is seeing a decline in ad spend. Overall, Apple said quarterly revenue rose 8% to $90.1 billion, above estimates of $88.9 billion, and net profit was $1.29. per share, beating analysts’ average estimate of $1.27 per share, according to Refinitiv data.
“We did better than expected, despite the fact that the exchange rate was a significant negative factor for us,” said chief financial officer Luca Maestri.
The rise in the US dollar has affected many companies such as Apple which generate substantial foreign revenue and receive less money when they convert it. For consumers, this increases the price of new devices when purchased in countries other than the United States.
Apple’s iPhone sales for the company’s fiscal fourth quarter reached $42.6 billion, while Wall Street had forecast sales of $43.21 billion, according to Refinitiv IBES.
Maestri said iPhone sales set a record for the September quarter, improving 10% from the year-ago quarter and beating the company’s forecast.
“The iPhone number is a clue to the turmoil and uncertainty in the market, but Apple has different ways to compensate,” said Runar Bjorhovde, research analyst at market research firm Canalys.
Apple’s Mac computer sales were boosted by the introduction of the redesigned MacBook Air and MacBook Pro laptops this summer. New tablets went on sale this week.
Apple said its 43.3% gross margin was a September quarter record.
Maestri said the robust computer sales also reflected an order backlog, caused by an extended shutdown at one of the factories that produces Macs, that Apple was able to fill during the quarter.
The company said iPad sales were $7.2 billion, compared to an average estimate of $7.94 billion.
Apple wearables such as AirPods and other accessories saw sales of $9.7 billion, slightly ahead of Wall Street’s forecast of $9.2 billion.
“They said they didn’t have a particular problem with supply, so that seems like a thing of the past,” said Carolina Milanesi, an analyst at Creative Strategies.
Growth in the company’s services business, which has boosted sales and profits in recent years, saw revenue hit $19.2 billion, below the $20.10 billion estimate of dollars.
Maestri said Apple has seen some softness in advertising and digital games, as have others in the industry.
“Like other big tech companies, even Apple is suffering from the negative impact of a deteriorating macroeconomic backdrop and ongoing supply chain issues, although it has been more successful in navigating this challenging environment” , Jesse Cohen, senior analyst at Investing.com .
In China, which has experienced a sharp economic slowdown, Apple reported fourth-quarter revenue of $15.5 billion. That’s a gain from the previous quarter, when Apple posted sales of $14.6 billion.
Apple said it now has 900 million paying subscribers to its services, up from 860 million in the previous quarter.
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Reporting by Dawn Chmielewski in Los Angeles and Nivedita Balu in Bengaluru; Editing by Peter Henderson and Lisa Shumaker
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