CEO Tim Cook said the new iPhone 15 models are “still doing fine” in China, a move that is seen as an attempt to ease Wall Street’s concerns that the US giant is losing market share in the world’s second-largest economy to Huawei and local smartphone makers.
Last quarter, Apple's revenue in China fell 2.5%, although the "Apple House" leader said that after adjusting for exchange rates, revenue grew positively.
“I'm surprised that Tim Cook is optimistic about the future in the Chinese market given the growing geopolitical challenges,” said Bob O'Donnell, chief analyst at TECHnalysis Research.
Chief Financial Officer Luca Maestri estimated that the company’s current-quarter sales, which include the Christmas holiday season when iPhone sales peak, will be in line with the previous year. Meanwhile, Wall Street forecasts that the US tech giant’s sales will increase 4.97% to $122.98 billion.
However, Apple believes that its fourth-quarter 2023 revenue and profit will still be maintained thanks to iPhone sales and service revenue offsetting the decline from Mac and iPad.
Apple said sales in the most recent quarter fell about 1% to $89.50 billion, but still beat analysts' estimates of $89.28 billion, according to LSEG data. Net income rose about 11%.
The Cupertino, California-based company weathered the global smartphone downturn much better than its rivals, but has faced an uneven recovery in China, a key market.
Mac, iPad and wearable sales drag down revenue
Currently, the iPhone is still Apple's best-selling device, bringing in revenue of $43.81 billion in the fourth quarter of 2023, in line with analysts' expectations.
However, the latest quarterly business estimates recorded Mac sales falling by a third to $7.61 billion and iPad sales falling 10% to $6.44 billion.
Sales in Apple's wearables segment, which includes the Apple Watch and AirPods, fell 3% to $9.32 billion, below estimates of $9.43 billion, according to LSEG data.
Meanwhile, Cook said new high-end phone models, including the iPhone 15 Pro and Pro Max, are facing supply constraints.
Not to mention, Apple is facing fiercer competition in the smartphone market, as Huawei Technologies marks its return with a flagship product using a “Made in China” chip manufactured on the advanced 7nm process, despite Washington's embargo.
Revenue in Apple's services segment, which includes Apple TV+, which recently struck a deal with soccer superstar Lionel Messi, rose 16% to $22.31 billion, compared with analyst estimates of $21.35 billion.
(According to Reuters)
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