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Apple suffers first quarterly revenue decline since 2019

Apple on Thursday posted its first quarterly sales drop in nearly four years after pandemic-related restrictions at its factories in China limited sales of the latest iPhone during the holiday season.

The company’s revenue of $117 billion for the October-December period represented a 5% decline from the same time last year, a deeper decline than analysts had been forecasting.

It’s Apple’s first year-over-year drop in quarterly sales since January through March 2019, when sales also fell 5% due to slowing iPhone demand and the aftermath of a trade war with China waged by then-President Donald Trump.

Apple’s profit also slumped last quarter, although the Cupertino, California-based company remained a pillar of prosperity. Earnings totaled $30 billion, or $1.88 per share, down 13 from the same point last year. Those results also missed a target of $1.94 per share set by analysts polled by FactSet Research.

Investors reacted to the disappointment by initially taking Apple shares nearly 5% lower in extended trading on Thursday. But management’s comments during a conference call with analysts raised hopes that Apple’s disappointing performance may have been just a hiccup, reducing the company’s share decline to less than 1%.

Apple’s rare stumble came amid renewed investor optimism about tech’s prospects for this year, which helped push the sector’s benchmark index, the Nasdaq Composite Index, up 17% year to date.

But now Wall Street appears to be reassessing things given Apple’s recent results and ongoing concerns about a potential recession amid rising interest rates aimed at curbing inflation, said Jesse Cohen, an analyst at Investing.com.

As Google also announced a quarterly year-over-year decline in its digital ad sales alongside Apple’s disappointing performance on Thursday, Cohen said it’s clear “the technology sector faces multiple challenges given the current economic climate of slowing growth and elevated inflation.”

Continue reading: These companies have announced the biggest layoffs of 2023

Despite the quarterly downturn in his wealth. Apple has signaled no intention to resort to mass layoffs — a stark contrast to its tech peers. Industry giants Alphabet, Microsoft, Amazon and Meta Platoforms have announced plans to collectively lay off more than 50,000 employees as they adjust to revenue declines or declines caused by people’s waning reliance on digital as the pandemic wanes .

“We’re taking a long-term view,” Apple CEO Tim Cook told analysts during the earnings call. “We invest in innovation and people.”

Cook had tried to prepare investors for a harder ride in late October when he warned of “increasingly difficult economic conditions” heading into the holiday season. Then, just days later, Apple warned that China’s attempts to contain the spread of COVID would disrupt its production lines and prevent it from meeting all demand for its premium iPhone 14 models during the holiday season.

That contributed to an 8% year-over-year decline in iPhone sales to $65.8 billion in its most recent quarter.

Cook pointed out that Apple’s supply woes are now over, reassuring analysts that “production is now back where we want it to be.”

In another positive sign, Apple also announced that it now has more than 2 billion iPhones, iPads, Macs and other devices in active use for the first time. That will likely help Apple sell more digital subscriptions and ads, which will help fuel long-term revenue growth.

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