Apple shares went down 4% in extended trading on Thursday, and the tech giant is the cause of this. Earlier, Apple reported its first-quarter earnings, which surpassed the estimated revenue.
However, this highlighted a disturbing 13% decrease in iPhone sales in China, which is their third biggest market, and this directly affected Apple stock.
In a statement, Apple CFO Luca Maestri stated that in the March quarter, the expected revenue for iPhone sales should be around last year’s $51.33 billion. While companywide revenue should stand at around $94.84 billion, which was last year’s figure.
It is safe to say that the iPhone sales issues came from under revised street expectations, which were surpassed by 6%. This is a positive sign for the iPhone 15 models released in September, although having a shaky Chinese market.
The local competition from companies like Huawei is responsible for the decline in Apple sales in China. Potentially, this shows a decreasing demand for Apple in Greater China, which includes, Hong Kong, Taiwan, and the mainland.
“Some of Apple’s growth rate actually represents a huge acceleration from last quarter, because this year’s December has one fewer week. It is important to keep in mind that last year, we had 14 weeks in the quarter while this year we had 13. This is because of the way Apple’s cooperate calendar works.”
Apple CEO Tim Cook to CNBC Steve Kovach
Turning to Apple services such as Apple Music, Apple Pay, Apple’s advertisements, warranties, and search licensing revenue, this has been a profitable business all year round.
During the quarter, the services business saw a rise of 11% to $23.11 billion in revenue, which in contrast to the expectations fell slightly short.
According to Apple, it has an estimated 2.2 billion active devices worldwide, which saw a significant growth from last year’s 2 billion active devices. Tim Cook said that the tech giant has over 1 billion paid subscriptions, including App Store subscriptions.
Other Apple Failures and Close Calls
The iPad, on the other hand, faced a heavy decline in sales, slumping 25% during the quarter. According to Tim Cook, this was not a surprise to the company.
In fact, for the first time in the history of the product, the company did not release a new model of the iPad in 2023.
Another growth was with the Mac sales, which grew less than 1% to $7.7 billion during the quarter after the product saw a 34% decline in annual sales based on the September quarter.
Other Apple products, which include the AirPods and the Apple watches, saw a decline of 11% in annual sales to deliver $11.95 billion that surpassed expectations.
The last blow came from the ban on the latest Apple Watches, which were removed from the Apple stores because of a patent dispute with Masimo, a medical device company in the United States.