Apple shares slide after forecasting iPads are no longer a Christmas must have
Apple’s latest earnings report revealed a sales forecast for the upcoming Christmas quarter that fell short of Wall Street’s expectations, primarily due to sluggish demand for iPads and wearables, causing its shares to drop over 3% in after-hours trading.
While the tech giant managed to exceed analysts’ expectations for its fourth-quarter earnings in terms of sales and earnings per share, it also marked the fourth consecutive quarter of declining overall sales.
The decline was particularly pronounced in Apple’s hardware divisions outside of the iPhone, with significant drops observed in both the iPad and Mac segments. iPad revenue fell by 10% compared to last year, and Apple didn’t introduce any new holiday products.
Consequently, Apple’s shares dipped by more than 3% to $171.57 in after-hours trading as executives expressed concerns about the company’s potential for growth in the crucial Christmas season. Apple’s stock had already seen an impressive 37% increase so far this year.
For the most recent quarter, Apple reported sales of approximately $89.50 billion, a marginal 1% decrease, yet it managed to surpass analyst estimates of $89.28 billion. Net income showed a more positive trend, increasing by around 11%. Moreover, profit per share came in at $1.46, surpassing analysts’ expectations of $1.39 per share.
Apple is currently grappling with intensified competition in the smartphone market, particularly from Huawei Technologies, which has re-entered the field with new phones powered by domestically manufactured chips. Huawei had previously faced significant restrictions imposed by the U.S. government for several years.
While Apple’s sales in China dipped from $15.47 billion in the fourth quarter of the previous year to $15.08 billion, CEO Tim Cook noted that when accounting for foreign exchange rates, Apple’s business in China experienced year-over-year growth, primarily driven by iPhone sales and services revenue.
The fiscal year that ended in September marked Apple’s first revenue decline since a 2% drop in 2019. Over the course of the year, Apple’s sales fell by nearly 6% to $298 billion. However, it is worth noting that the company achieved a record gross margin of 44.1% for the full year.
The company said it will pay a 24-cent dividend per share this month, with $25 billion used for share repurchases and dividends in the quarter.