Is iPhone 14 stagnation proof?  Apple earnings may provide a hint

Is iPhone 14 stagnation proof? Apple earnings may provide a hint

By Claire Duffy, CNN Business

Apple is about to give its first hints about iPhone 14 Sales follow weeks of rumors that demand for the latest lineup of smartphones may be weaker than initially expected.

On Thursday afternoon, Apple will announce its earnings results for the September quarter, a period that includes nearly two weeks worth of sales of its iPhone 14 lineup. Although the time period is limited, Apple’s results and comments for the current holiday quarter can provide insight into how it faces The company and its primary product of the economic recession. take a hit to the results of other technology companies.

Apple stock briefly dropped Last month, after a report that the company abandoned its plans to increase production of the iPhone 14 lineup in the second half of this year due to lower-than-expected demand. (Apple did not respond to a request for comment at the time.)

Analysts expect Apple To generate revenue of $88.9 billion, up more than 6% year over year, a marked slowdown from the 29% sales growth it recorded in the same quarter last year. It is expected to report a profit of approximately $20.4 billion, essentially flat from the prior year.

In recent years, Apple’s iPhone versions have lacked the kind of new game-changing features and big hardware redesigns that encourage many users to upgrade whether or not they need a new phone. But this year, as consumers wrestle with it High inflation and fears of a possible recessionConvincing them to pay $799 or more for a new device can be even more difficult. A stronger US dollar could also make devices seem more expensive to consumers outside the US, which is a big part of Apple’s business.

“The consumer electronics industry is heading into a period of slow growth,” Dan Morgan, senior portfolio manager at Synovus Trust Company, said in a note to investors.

However, analysts say there are some reasons for optimism. The high-cost iPhone 14 Pro appears to be the most popular of the new models, which is expected to boost average selling prices for iPhones across the board, according to Angelo Zino, senior equity analyst at CFRA Research.

Apple no longer details the number of iPhone units it sells. Instead, it only reports the total revenue generated by the product segment, which makes it difficult to accurately analyze demand.

Apple watchers are also likely to pay close attention to the performance of the company’s services segment, which includes its paid subscriptions and is seen as an increasingly important unit in the business designed to offset sluggish growth in parts of its hardware business.

Brian White, an analyst at Monness, Crespi, Hardt, said in an investor note Friday that he expects services revenue growth to slow slightly to 10% year over year, down from 13% in the last year’s quarter.

Changing consumer behavior may slow down services. During earnings call Chief Financial Officer Ruth Porat said this week for Alphabet, a Google subsidiary, that Google Play revenue has fallen slightly due to lower user spending on the platform, especially lower game engagement from earlier in the pandemic.

Apple earlier this week raised prices For music and TV streaming services, which can help increase sales in the future.

CNN Wire
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