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Apple lacks clear path to growth this holiday season after shrinkage


Apple CEO Tim Cook looks on during an Apple event at their headquarters in Cupertino, California, September 7, 2022.

Carlos Barria | Reuters

Apple indicated on Thursday that investors shouldn’t expect revenue growth in the December quarter, the busiest and most important time of the year for its business.

In its fiscal fourth-quarter earnings report on Thursday, Apple beat analyst expectations, and CEO Tim Cook said the iPhone 15 was performing better in its early days than the iPhone 14 last year at this time.

Still, revenue fell about 1% from a year ago to $89.5 billion, marking a fourth straight quarter of shrinkage. That’s the first time Apple has experienced such a stretch since before the iPhone was launched in 2007.

Commentary from CFO Luca Maestri on Thursday pointed to continued weakness in Apple’s Mac, iPad, and Wearables businesses, despite a relatively positive outlook for iPhone sales.

Apple doesn’t provide official hard number guidance and hasn’t since 2020. Instead, Maestri said revenue for the current quarter will be “similar” to where it was last year, suggesting the company faces some challenges during the all-important holiday season.

The stock sank 3.4% in extended trading.

Translating Maestri

Apple’s CFO reminded investors that the final quarter of the calendar year “will last the usual 13 weeks whereas the December quarter a year ago spanned 14 weeks.”

Maestri said last year’s extra week added about 7% to total revenue.

“Despite having one less week this year, we expect our December quarter total company revenue to be similar to last year,” Maestri said.

Wall Street was expecting better. Revenue in the year-earlier period was $117.15 billion. Analysts were projecting sales for this December quarter of about $123 billion, representing about 5% growth.

Tim Cook, chief executive officer of Apple Inc., holds an iPhone 15 Pro Max during an event at Apple Park campus in Cupertino, California, US, on Tuesday, Sept. 12, 2023. 

David Paul Morris | Bloomberg | Getty Images

For the iPhone, Maestri said the company expects growth “year over year on an absolute basis” even if past comparisons were adjusted to add sales lost because of supply chain disruptions.

Apple reported $65.78 billion in iPhone sales in the December quarter last year.

However, Apple’s other hardware businesses don’t appear to be faring as well.

Maestri said that performance in the Mac business will “significantly accelerate from the September quarter.” Year-over-year Mac revenue fell nearly 34% in the September quarter, so a significant improvement still suggests a decline from last year.

Apple said the drop in Mac sales this past quarter was the result of tough comparisons to 2022, when sales got pushed from one period to another because of supply constraints.

In the December quarter last year, Apple reported $7.74 billion in revenue from its Mac business.

Both Apple’s iPad and its wearables business fell on an annual basis in the September quarter, and Apple is expecting even more declines in this quarter. For iPad revenue, Apple saw a 10% decline.

Maestri pointed out that Apple refreshed some iPad models in October 2022, boosting sales. The company hasn’t released new iPad models this year.

Last year’s holiday season had a full quarter of sales from a new AirPods model, a low-cost Apple Watch and the pricey Apple Watch Ultra. Apple released AirPods with a different charger and an update to the Apple Watch Ultra this September.

One bright spot for the company this holiday season will be its services business, which includes App Store sales, online cloud storage, AppleCare warranties, advertising and licensing deals with Google, and subscriptions like Apple Music.

“For our Services business, we expect the average revenue per week to grow at a similar, strong double-digit rate as it did during the September quarter,” Maestri said. Apple services grew 16%, the company said.

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