Apple's earnings beat record Mac back-to-school sales that outperformed iPhones

Apple’s earnings beat record Mac back-to-school sales that outperformed iPhones

At the end of a sad week for the earnings of major tech companies, Apple Inc. It beat expectations on revenue and profits with the help of Macs selling at a record pace during the back-to-school season, which outpaced a slight loss in iPhone sales.

Apple AAPL,
-3.05%
Shares rebounded between slight gains and losses in after-hours trading Thursday, even as executives expected revenue growth could slow in the holiday quarter. As has been the case throughout the COVID-19 pandemic, Apple executives declined to provide traditional financial forecasts, but Chief Financial Officer Luca Maestri told investors on a conference call that they expect a back-to-back slowdown in growth during the December quarter, driven in part by sharp currency effects and tough comparisons. For Mac business and the pressures on the services business.

The smartphone giant’s revenue grew 8% in the fourth quarter of the fiscal year, to $90.1 billion from $83.4 billion a year earlier, and came ahead of the FactSet consensus of $88.7 billion. Apple made $42.6 billion in its largest business, iPhone sales, up from $38.9 billion a year earlier, but analysts had expected $43.0 billion.

The biggest driver behind the upside was Apple’s AAPL,
-3.05%
The Mac segment, which has been a huge success even with the iPhone sales popping up. The Mac business posted an all-time record quarterly revenue of $11.5 billion in the back-to-school quarter, up from $9.2 billion a year ago and easily above the FactSet consensus, which called for $9.3 billion.

CEO Tim Cook explained on the call that the Mac class has benefited from the launch of the MacBook Air with Apple’s custom M2 chip, as well as the easing of supply restrictions that have allowed Apple to meet a previous backlog. Maestri said he expects Mac revenue to fall significantly year-over-year in the December quarter, though, as that period faces tough comparisons.

The main question asked in the Apple report was How is the demand for the company’s new line iPhone 14 escalated?especially given the reports the company has Reducing previous production targets. Cook shared that while it’s still early days, “consumer demand has been strong and better than we expected.”

Cook said the company is limited in supply on the iPhone 14 Pro and iPhone 14 Pro Max models, adding that it’s difficult for the company to “select the exact mix” of its phones so it can meet all of its demands.

Revenue performance across Apple’s product lines has been mixed. While Mac sales were strong, iPad revenue fell to $7.2 billion from $8.3 billion, while analysts were modeling at $7.8 billion in iPad revenue. That category saw “opposite” trends for the Mac business as iPads faced a “very strong iPad quarter” compared to the previous year that included a product launch.

The company generated $9.7 billion in revenue across the wearables, home and accessories category, up from $8.8 billion in the same period last year. Analysts had expected revenue of $9.2 billion.

Services revenue jumped to $19.2 billion from $18.3 billion, but fell short of the FactSet consensus, which was for $20.0 billion. Maestri shared that while the sector is expected to grow in the December quarter, business could be affected by pressures on advertising and gaming, as well as foreign exchange effects.

In the most recent quarter, Apple reported net income of $20.7 billion, or $1.29 per share, compared to $20.6 billion, or $1.24 per share, in the same period a year earlier. Analysts tracked by FactSet expected $1.27 per share of earnings.

If Apple stock manages to sustain gains through Friday’s close, it will likely be the only Big Tech to see a positive post-earnings stock performance this week. Microsoft Corp. shares. MSFT,
-1.98%And the
Alphabet Inc. GOOG,
-2.34%

Google,
-2.85%And the
and Meta Platforms Inc. META,
-24.56%
Each posted a sharp decline in the session after their own reports, and Amazon.com Inc. AMZN,
-4.06%
Shares were down 12% in late trading Thursday.

Apple shares have lost 18% so far this year, like the DJIA Dow Jones Industrial Average,
+ 0.61%
– which Apple counts as one of its 30 components – is down 12%.

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