Apple disappoints with tepid forecast, China weakness despite strong iPhone sales
LOS ANGELES – Apple, heading into its most critical sales period of the year, sparked fresh concerns about revenue growth and lingering weakness in an intensely competitive China market.
Following the company’s quarterly earnings report, Apple said that total sales in the December period will rise by a percentage in the low-to-middle single digits. Analysts had been projecting a 7 per cent increase. The company also posted a decline in China revenue last quarter, falling short of estimates.
The broader picture shows a company still trying to rebound from one of the longest sales slumps in its history. Revenue had declined four straight quarters in fiscal 2023 and only returned solidly in the past two quarters. Apple remains the most valuable company on earth, but it has had to contend with a sluggish smartphone market, more competition in China and regulatory scrutiny around the world.
The concerns weighed on shares in late trading on Oct 31, sending them down about 2 per cent. The stock had been up 17 per cent in 2024 through the Oct 31 close, fuelled by optimism about Apple’s artificial intelligence (AI) prospects.
Overall revenue edged past Wall Street projections last quarter – helped by global iPhone demand – but the results show that the company is still struggling in a key market. Apple is competing with local brands in China, which serves as its main manufacturing hub.
Revenue in the region fell slightly from a year earlier to US$15 billion (S$19.8 billion) in the fourth fiscal quarter, which ended Sept 28. Analysts had estimated US$15.8 billion.
The iPhone grew in every geographic market, chief executive Tim Cook said, signalling that the rest of the company’s product line-up may have been the issue in China, its biggest source of revenue after the Americas and Europe.
Total sales rose 6.1 per cent to US$94.9 billion, compared with an average estimate of US$94.4 billion. Earnings were 97 cents a share, though they would have been US$1.64 without a one-time charge related to a European General Court decision, Apple said.
Apple introduced the iPhone 16 in September, helping spur upgrades. It also updated Apple Watches and released new AirPods. Those consumer devices account for the majority of the company’s revenue.
Investors have been betting that Apple Intelligence – the company’s new suite of AI features – will help fuel device sales. But the software debuted weeks after the iPhone went on sale, and many of its biggest features are still months away.
Revenue from the iPhone came in at US$46.2 billion, beating estimates of US$45 billion. That is up 5.5 per cent from a year earlier. The business may get another boost in 2025, when the company is planning to release a new low-end iPhone SE with Apple Intelligence – as well as more significant hardware changes to its flagship models.
But other product divisions fell short of analysts’ estimates last quarter. That included the iPad business and Apple’s wearables division.
Mr Cook visited China earlier in October, promising future cooperation and further investment in the country. Apple has yet to announce plans to roll out Apple Intelligence in the region, and it is seeking local partners to bring the functionality to its users there.