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Apple, Q1 profit above expectations but sales in China are worrying

Apple last night announced financial results for the first quarter of fiscal 2024, ending December 30, 2023.
Quarterly revenue grew 2% to $119.6 billion, with net income of $33.92 billion, or $2 ,18 (+16% compared to a year ago).
However, the stock fell 4% in after-hours trading on Wall Street, raising concerns.
Let's see Apple's results below, focusing on iPhone sales, the trend of the Chinese market, the growing importance of services and future prospects.
Q1 financial results at a glance: Earnings per share: $2.18 (Expected $2.10) Revenue: $119.58 billion higher than expected $117.91 billion iPhone Revenue: $69.70 billion versus $67.82 billion expected Mac Revenue: $7.78 billion vs.
$7.73 billion expected iPad Revenue: $7.02 billion vs.
$7.33 billion estimated Other Products Revenue: $11.95 billion vs.
$11.56 billion expected Services Revenue: $23.12 billion versus $23.35 billion expected Gross margin: 45.9% versus 45.3% expected iPhone sales plummet in China iPhone sales, despite growth of 6% to $69.70 billion, are worrying investors.
China, Apple's third-largest market, saw a 13% decline, raising questions about demand.
In a saturated market, the main challenge for Apple is to reduce its dependence on iPhones, which currently contribute 48.9% of revenues.
The services component, including subscriptions to Apple Music, iCloud+, Apple One and commissions from the AppStore, has become crucial, contributing about a quarter of total revenue.
However, new regulatory challenges, such as the need to allow app downloads outside the AppStore and the use of alternative payment systems, could negatively affect this segment, threatening the group's commissions.
Stock performance and future prospects Apple stock experienced a turbulent start to the year, falling from $200 to $180, reflecting uncertainties over the iPhone's sales prospects, especially in China, where a 13% decrease was recorded.
Although the company beat expectations for net profit and revenue, the stock fell 4% in after-hours trading on Wall Street.
CFO Luca Maestri forecast iPhone sales similar to the previous year's March quarter, eliminating the effect of the previous year's outperformance caused by post-Covid recoveries.
However, the company remained mum on its forecast for the current quarter, which ends in March.
The growth of artificial intelligence is cited as a deciding factor, but the market appears to be attributing a competitive advantage to companies like Microsoft, which recently overtook Apple in terms of market capitalization.

Author: A.W.M.

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