Apple earnings top forecasts, but sales fall for 4th straight quarter on Mac, China weakness

Apple notched its fourth consecutive quarterly revenue decline thanks to weak hardware and China sales, but topped Street earnings forecasts.

Nov 3, 2023 - 03:30

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Apple earnings top forecasts, but sales fall for 4th straight quarter on Mac, China weakness

Updated at 5:27 pm EDT

Apple AAPL posted better-than-expected fourth quarter earnings Thursday, but notched its fourth consecutive sales decline as hardware sales slumped and China sales fell shy of Street forecasts.

Shares moved lower in after-hours trading, however, after the tech giant said current quarter sales would grow at a similar rate to last year, imply a revenue growth rate of around 5%, a tally that fell shy of Wall Street forecasts.

Apple said earnings for the three months ending in September, the group's fiscal fourth quarter, were pegged at $1.46 per share, a tally that was up 13.2% from the same period last year and 7 cents ahead of the Street consensus forecast of $1.39 per share.

Group revenues, Apple said, fell 0.7% from last year to $89.5 billion, notching the fourth consecutive sequential decline but recording a tally that narrowly topped analysts' estimates of an $89.28 billion tally.

Apple said iPhone revenues rose 2.8% from last year to a September quarter record of $43.81 billion, matching Street forecasts, while China sales fell 2.5% from last year's Covid-hit period in the world's second largest economy to $15.084 billion.

Overall gross margins were pegged at a record 45.2%, Apple said, while its global user based "reached a new all-time high across all products and all geographic segments."

“Today Apple is pleased to report a September quarter revenue record for iPhone and an all-time revenue record in Services,” said CEO Tim Cook. “We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030.”

Apple shares, which closed at $177.97 Thursday, were marked 4% lower in after-hours trading immediately following the earnings release to indicate a Friday opening bell price of $169.90 each.

“Our active installed base of devices has again reached a new all-time high across all products and all geographic segments, thanks to the strength of our ecosystem and unparalleled customer loyalty,” said CFO Luca Maestri.

“During the September quarter, our business performance drove double digit EPS growth and we returned nearly $25 billion to our shareholders, while continuing to invest in our long-term growth plans,” he added.

Revenues from Apple's key services business -- which includes Apple Pay, iCloud and Apple TV --- rose 16.3% to $22.31 billion, well ahead of the $21.35 billion forecast.

Hardware sales, as expected were soft: Mac sales fell 33.9% from last year to $7.61 billion, Apple said, and iPad sales were down 10.2% to $6.44 billion. Wearables sales, which includes the AppleWatch, fell 3.4% to $9.32 billion.