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Apple’s earnings top analysts’ forecasts, but year-over-year sales drop for third straight quarter

by Michael Nguyen
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Apple's earnings

Apple’s earnings exceeded analysts’ expectations in the last quarter, but its year-over-year sales declined for the third consecutive quarter. Despite posting a slightly higher profit, the dip in sales has raised concerns among investors, especially after the company’s recent milestone of becoming the first publicly held U.S. company to reach a $3 trillion valuation.

The financial results, released for the period of April through June, mark Apple’s longest stretch of falling sales in nearly seven years. Additionally, the company expects a revenue decline in the current quarter from July to September, even with the anticipated release of the next iPhone. This disappointing forecast, coupled with lukewarm results from the past quarter, caused Apple’s stock to drop 2% in extended trading on Thursday, potentially pushing its market value below the $3 trillion threshold it achieved in late June.

During the last quarter, Apple’s revenue reached $81.8 billion, a 1% decrease from the previous year. However, profit increased by 2% from the same period, amounting to $19.9 billion, or $1.26 per share. While the earnings surpassed analyst projections of $1.20 per share, the revenue met their expectations.

The decline in iPhone sales, a product segment closely monitored by Wall Street, contributed to the concerns among investors. Nevertheless, some analysts believe that consumers might be holding out for the next iPhone release, which could boost sales in the future.

Despite the sales erosion, investors have remained optimistic about Apple’s prospects, largely due to the company’s stable performance compared to other major technology companies that faced more significant challenges during the pandemic. Apple managed to generate substantial profits and has also introduced potential growth opportunities, such as a high-end virtual reality headset aimed at a broader audience.

The technology sector, including Apple, has seen a resurgence in quarterly reports, recovering from the pandemic-induced downturn. While industry conditions have improved, legal battles against Big Tech companies, including Apple, could pose potential obstacles. For example, Apple is currently fighting court rulings that may allow iPhone app makers to offer payment options for digital services outside the company’s system, impacting the lucrative commissions generated by its services division. Additionally, a major antitrust case against Google may have implications for Apple, as the search giant pays the company billions annually to be the default search engine on its products.

To clarify, Apple’s quarterly net income rose by 2% from a year ago, as opposed to the earlier version that stated an increase of less than 1%.

Frequently Asked Questions (FAQs) about Apple’s earnings, sales, investor enthusiasm, stock value, legal battles

Q: What were Apple’s financial results in the last quarter?

A: In the last quarter (April to June), Apple’s revenue totaled $81.8 billion, showing a 1% decline from the previous year. However, the company’s profit increased by 2% compared to the same period, reaching $19.9 billion, or $1.26 per share.

Q: How did the market react to Apple’s financial results?

A: Despite slightly better-than-expected earnings, the year-over-year sales drop for the third straight quarter raised concerns among investors. As a result, Apple’s stock fell 2% in extended trading, and if the trend continues during regular trading, the company’s market value may drop below the $3 trillion threshold it reached in late June.

Q: What is the reason behind the decline in sales?

A: Apple’s CEO, Tim Cook, mentioned that the company continues to face an uneven macroeconomic environment, which could be contributing to the decline in sales.

Q: Is Apple optimistic about future revenue?

A: Apple indicated that revenue for the current quarter (July to September) is expected to decline, despite the anticipated release of the next iPhone, suggesting some uncertainties in the market outlook.

Q: How has Apple performed compared to other tech companies during the pandemic?

A: Apple has managed to hold its ground and generate significant profits during the pandemic, which sets it apart from other major technology companies that suffered more severe sales declines. Its results have been less wobbly, contributing to investor confidence.

Q: Are there any legal challenges faced by Apple?

A: Yes, Apple is currently fighting court rulings that may allow iPhone app makers to provide payment options for digital services outside its own system. This legal battle could affect the company’s services division, which generates substantial revenue from commissions.

Q: What are some potential obstacles for Apple’s services division?

A: The division’s revenue source, mainly commissions from app developers, is being scrutinized in an antitrust case against Google. The case will be evaluated by the U.S. Supreme Court and could have implications for Apple’s business model.

Q: What are some growth opportunities for Apple?

A: Apple has unveiled a high-end virtual reality headset, which analysts believe could introduce virtual reality to a broader audience and potentially open up new growth opportunities for the company.

Q: How has the technology sector been performing in general?

A: The technology sector, including Apple, has experienced a resurgence in quarterly reports, showing signs of recovery from the pandemic-induced downturn.

Q: What could be influencing consumer behavior in relation to iPhone sales?

A: Some analysts believe that consumers might be holding out until the next iPhone release, which could potentially boost sales in the future.

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