Apple broke 14-quarter revenue growth as supply chain problems in China delayed iPhone deliveries during the critical holiday period.
Total revenue in the quarter fell 5.5 percent to $117.2bn, below forecasts of $121.1bn, according to Refinitiv. Analysts fell 2 percent after Apple warned of supply chain disruptions in November. Net profit fell 13.4 percent to $30 billion, below forecasts of $31 billion.
iPhone sales fell 8.2 percent to $65.8 billion, compared to forecasts for a 3.4 percent decline to $69.2 billion.
Apple’s chief financial officer Luca Maestri told the Financial Times that without the disruption iPhone sales would grow. He declined to estimate what the shortfall would be, saying: “We are losing significant production.” Chief executive Tim Cook in a statement described the environment as “challenging”.
The company had warned three months ago that foreign exchange headwinds could shave up to 10 per cent off its revenue, equivalent to a $12bn hit. According to Thursday’s results, the real impact is about 8 percentage points.
“Eight percent of our revenue is lost to the strength of the dollar, but it is better than three months ago because the dollar has weakened a bit,” he said. “Inflation is still rising in the UK, and it’s starting to ease a little bit in the United States, so that’s affecting the currency as well.”
Maestri said Apple’s “actively installed base” – the number of iPhones, iPads and other devices used – has crossed 2bn, up from 1.8bn last year. “This is double the number of active devices that were just seven years ago,” he said.
Mac computer sales fell 29 percent to $7.74 billion and revenue from the wearables unit, which sells the Apple Watch and AirPods, fell 8.3 percent to $13.5 billion.
Revenue from the fast-growing services unit, which houses the App Store and digital media buying, rose 6.4 percent to $20.8 billion. iPad sales were another bright spot, rising 29.6 percent to $9.4 billion
Apple’s challenge is different from that faced by other Big Tech groups such as Meta and Alphabet, or even rival hardware maker Samsung. While demand remains strong, it has struggled to fulfill orders since the Covid outbreak in “iPhone City” in Zhengzhou, an assembly hub run by partner Foxconn, prompted a warning in November of “significant” disruptions.
The Cupertino-based group lost $1tn in market capitalization in the 12-month period to early January, when it briefly dropped $2tn. But sentiment has rebounded, sending Apple shares up about 20 percent since the start of the year.
Shares fell more than 3 percent in after-hours trading.