Apple Inc. offered some good news Thursday to calm investors’ fears about the economic slowdown. The company’s third-quarter profit and revenue topped estimates by analysts and bought time for itself to launch new products.
As the iPhone sales increased, CEO Tim Cook held a combination of headwinds hampering the apple business. He forecasted that sales would pick up in the months ahead.
Apple shares rose to $164.01, gaining 4.2% late Thursday after the results were declared. This year Apple Inc. shares have declined 11 % through Thursday’s close with a broader slide in tech stocks.
Earlier this year, Apple warned about a challenging third quarter cutting sales between $ 4 billion and $ 8 billion due to snags in the supply chain. But in a fashion typical of Apple, the company’s actual result was better than estimates.
The third quarter revenue rose to $83 billion, up 2%, and analysts had predicted an average of $82.8 billion. Earnings per share were $1.20 against the $1.16 projection.
While products such as Mac and wearables fell short of estimates, iPad and iPhones fared better than feared in the third quarter. A key growth area for the company, Services also missed estimates narrowly.
However, the iPhone sales figure suggests that Apple is facing a slowdown in smartphone sales. Amazon.com Inc.’s results on Thursday posted a stronger than expected revenue with upbeat forecasts, assuring wary tech investors.
In an interview with Bloomberg Intelligence, cook acknowledged company was combating softness and a slower economy but expected the fourth quarter to show better revenues.
Apple is cautious while confronting a sputtering economy even though it is faring better than its tech peers. As reported by Bloomberg earlier, it plans to reduce spending and slow hiring in 2023 for specific teams.
Supply Chain Woes
The last quarter saw apple struggling with the supply chain from China. Many factories were under lockdown under Covid-19 precautions resulting in hamstrung deliveries. The problems are not over yet though it has eased.
The strong dollar has also threatened to affect sales. Cook said that supply constraints might have masked the softened consumer demand. While Apple struggled to get inventory, it is unclear whether some of it is still unsold.
Apple Inc. typically faces a slow third quarter with the company having few new products to show. Apple is expected to release fresh iPhone models in September after having last released an updated iPhone SE in March. Even then, iPhone generated revenue of $40.7 billion in the previous quarter, beating estimates of $39billion.
Last quarter’s digital services sales from AppleCare, Apple TV+, Apple Music, and iCloud grew 12% to $19.6 billion. This was the fastest growing category though the division fell short of estimates of $19,7 billion.
Luca Maestri, Chief financial officer of Apple Inc., said that the company would see accelerated growth in the final quarter. The services business may slacken because of the slump in digital advertising.
