Apple Reports First Annual Drop in Sales and Profits since 2019
Apple has closed fiscal year 2023 with its first annual decline in sales and profits since 2019, marking a challenging year for the tech giant. The company, led by CEO Tim Cook, faced a difficult start to the year due to a drop in sales in China, where strict COVID-19 restrictions were imposed at the end of 2022. Despite efforts to regain momentum, Apple was unable to reverse the decline.
For the fiscal year, Apple reported a 2.8% decrease in revenue, amounting to $383.3 billion, and a corresponding drop in profits by the same percentage, reaching $97 billion. The decline was primarily attributed to a decrease in iPhone sales, the company’s flagship product, as well as a sharp decline in Mac personal computer sales. Despite these setbacks, Apple’s revenue from services reached a record high, but it did not fully compensate for the decline in other product sales.
The fiscal year showed a gradual improvement for Apple. Sales fell by 5% year-on-year in the first quarter, followed by a 3% decline in the second quarter, exceeding analysts’ expectations. The third quarter witnessed a smaller decline of 1.4%, thanks to a recovery in demand in China. In the fourth quarter, sales only decreased by 0.7% to $89.5 billion, accompanied by a 10.8% increase in profits, surpassing those of Microsoft in the same period.
The launch of the iPhone 15 in the final quarter gave Apple a boost, allowing total iPhone sales to grow by 2.8% to $43.8 billion, a record for the September quarter. Nevertheless, the reception of the iPhone 15 in China fell short of expectations, as the company faced increased competition from Huawei and a potential ban on the use of Apple devices by Chinese officials.
While Apple’s services revenue set new records, concerns have been raised during the antitrust trial against Google. A significant portion of Apple’s service revenue is generated from the search engine, leading analysts to suggest that a court decision prohibiting Google from being the default search engine for Apple devices could negatively impact the company. Services revenue, which includes Apple Store purchases and subscriptions, increased by 9% to $85.2 billion for the year.
Mac sales suffered the most, experiencing a 26.9% decline to $29.4 billion for the fiscal year and a sharp drop of 33.8% in the last quarter. The surge in computer sales during the pandemic slowed down later on, while revenue from iPad and other product sales also decreased by just over 3%.
Despite the challenges, Apple’s stock market value has increased by more than 40% this year, making it the world‘s most valuable company with a market capitalization of nearly $2.8 trillion. However, Microsoft has been closing the gap with its successful focus on artificial intelligence and cloud computing. While Apple maintains a strong global brand, popular consumer products, high margins, and loyal users, the company needs to recover from a year of declining sales.
CEO Tim Cook acknowledged the success of Apple’s products in the September quarter and expressed confidence for the upcoming holiday season, emphasizing the launch of the iPhone 15 and the release of carbon-neutral Apple Watch models. Cook also disclosed that a cash dividend of $0.24 per common share has been approved by the board of directors, payable to shareholders in mid-November.
Analysts are hopeful that Apple’s revenue will start to recover in the first quarter of the new fiscal year after four consecutive declines. Further updates on Apple’s economic outlook and developments can be found on their official Facebook page and Twitter account.
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