Apple Earnings Are Decent in Otherwise Terrible Week for Tech
Apple's latest quarterly results were slightly better than expected, but sales in its key iPhone segment were a bit disappointing.
Apple reported slightly better-than-expected results for its September quarter.
iPhone sales came in lighter than expected, but they were offset by a strong quarter for the company’s Mac unit.
The stock was up 0.6% in premarket trading Friday.
Total sales for the quarter were $90.1 billion, up 8 percent year over year, with earnings up 4%, to $1.29 a share. Wall Street analysts had forecast sales of $88.9 billion with profits of $1.27 a share. Apple CFO Luca Maestri said revenues were reduced by more than 600 basis points by foreign exchange headwinds.
Apple reported iPhone sales of $42.6 billion, up 9.7%, but slightly below analysts’ forecast for $43.4 billion.
Mac sales were $11.5 billion, up 25%, and well ahead of the Street’s forecast of $9.3 billion, benefitting from a much better supply chain situation than the previous quarter, the introduction of new models, and increased sales into the channel. In the June quarter, Mac sales were down 10%. CEO Tim Cook said on the call that “silicon related supply constraints were not significant in the quarter.”
Meanwhile, iPad sales were $7.2 billion, down 13%, and shy of the Wall Street consensus view of $7.8 billion. Sales in the wearables, home and accessories segment were $9.7 billion, up 10%, and above the Wall Street consensus of $9 billion.
Services revenue was $19.2 billion, up 5%, but short of analysts’ forecast for $20.1 billion; Maestri noted that both gaming and advertising softened on macroeconomic weakness. The company also noted that it now has more than 900 million subscribers to its various services, up from 860 million one quarter earlier, and up 155 million over the last 12 months.
Apple said sales were up 8% in the Americas, almost 10% in Europe, and 6% in China. Japan sales were down about 5%. For the rest of Asia, sales were up 23%.
Gross margin was 42.2%, towards the high end of the company’s guidance range of 41.5% to 42.5%.
Apple stopped providing detailed financial guidance early in the pandemic, and isn’t likely to resume the practice soon. But Maestri provided some generally cautious commentary on the December quarter. He said revenue will decelerate from the September quarter, in part reflecting 10 percentage points of headwind from foreign exchange. Maestri also said Mac sales would be down substantially in the quarter from a year ago, given a difficult comparison with when new models based on the M1 processor were introduced. He also said services revenue would grow, but would face some macro impact on both advertising and gaming.
Maestri said gross margin in the December quarter would range from 42.5% to 43.5%. Wall Street ahead of the call projected revenue of $126.8 billion, up 2% from a year ago, with profits of $2.12 a share.
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Apple noted that the fourth quarter this year will consist of 14 weeks, rather than the usual 13, which should add a few days of sale and some additional operating expense as well.
Apple said it bought back $25.2 billion in stock in the quarter, and finished the quarter with $49 billion in net cash.
For the full fiscal year ended Sept. 25, the company reported sales of $394.3 billion, with profits of $6.15 a share. Apple reported full year iPhone revenue of $205.5 billion, $40.2 billion in Mac sales, $29.3 billion in iPad sales, $41.2 billion in sales for wearables, home and accessories, and $78.1 billion in services revenue.
Write to Eric J. Savitz at eric.savitz@barrons.com