In a recent announcement, Apple provided a sales forecast for the upcoming holiday quarter, which fell short of Wall Street's expectations, primarily due to weak demand for iPads and wearables. This led to a 3% drop in Apple's shares during after-hours trading.
CEO Tim Cook reassured investors that the new iPhone 15 models were performing well in China, dispelling concerns about losing market share to local competitors like Huawei. Although Apple's overall revenue from China declined by 2.5% in the fiscal fourth quarter ending on September 30, Cook mentioned that it saw growth when accounting for foreign-exchange rates.
Apple's Chief Financial Officer, Luca Maestri, stated during a conference call with analysts that the sales forecast for the current quarter, which includes the holiday season and the launch of new iPhone models, is expected to be similar to the previous year. Wall Street had anticipated a 4.97% increase in sales to $122.98 billion.
Despite Apple's strong performance this year, with shares rising by 37%, their stock dipped by 3.4% following this announcement. Maestri noted that Apple foresees higher iPhone sales in the fiscal first quarter, even though this year's holiday quarter has one fewer week of sales compared to the previous year.
Apple reported sales and profits for the fiscal fourth quarter that exceeded Wall Street's expectations, thanks to increased iPhone sales and a $1 billion boost in services revenue, which offset declines in Mac and iPad sales. Cook mentioned that the company's new high-end iPhone models, the iPhone 15 Pro and Pro Max, are currently facing supply constraints.
While Apple has managed to navigate the global smartphone slowdown better than its competitors, it still faces challenges in China, a crucial market. Sales from China were down slightly, but Cook highlighted that, after accounting for foreign-exchange rates, the business in China grew year-over-year, primarily driven by iPhone sales and services revenue.
However, Apple's sales in China faced pressure from the return of Huawei to the smartphone market with new devices powered by Chinese-made chips, following years of trade restrictions imposed by the U.S. government. Despite these challenges, Apple continues to perform well, with the iPhone remaining its top-selling product.
In terms of Apple's other products, Mac sales declined by a third, and iPad sales dropped 10% compared to expectations. Sales in the wearables segment, which includes the Apple Watch and AirPods, also fell short of estimates.
On a more positive note, Apple's services segment, which includes Apple TV+ and recently secured a deal with soccer superstar Lionel Messi, saw a 16% increase in sales, surpassing analyst estimates.
In summary, Apple's holiday quarter forecast has raised concerns due to weaker demand for iPads and wearables, but the company remains confident in its iPhone performance, especially in China. While there are supply constraints for certain models, Apple anticipates improved sales in the upcoming fiscal first quarter. The overall picture for Apple shows a mixed performance across different product categories, with continued strength in services.
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