IPhone Sales Bounce Back After Tough Holiday Season

Profits were higher than predicted, even though revenue decreased for the second consecutive quarter.

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Apple sent more iPhones after facing issues with the supply chain during the holidays. However, the revenue continued to drop on a yearly basis for the second consecutive quarter because the economy was harder and currency values were down.

Apple's finance chief Luca Maestri reported a significant increase in iPhone revenue from December to March. The sales of the device, which generated 54% of total revenue, increased by 2% in the quarter to $51.3bn. This exceeded the estimated amount of $48.9bn.

Investors were worried about demand after Covid-19 outbreak at Foxconn factory. The factory is called "iPhone City" and it stopped production in November. The uptick in sales is a relief to investors. They were concerned about what demand would be like.

Apple's CEO, Tim Cook, said they have overcome challenges like the pandemic, chip shortages, and macroeconomic factors. He praised the resilience of their supply chain and feels positive about their plans going forward.

In the past three months ending in March, total revenues decreased by 2.5% to $94.8bn compared to last year. Mac computers and iPads experienced big drops in sales, causing this decline. Net profits also fell 3.4% to $24.2bn. Analysts predicted lower revenue and net profits, with $93bn in revenue and $22.6bn in net profits according to Refinitiv.

Maestri said foreign exchange problems caused a 5.4% drop in revenue. Without foreign exchange problems, revenue would have grown 3%.

Asia (excluding China and Japan) had a good year – revenues rose by 15.3% to $8.1bn. Certain countries did particularly well, such as Mexico, Indonesia, Turkey and the Philippines. These places helped the company achieve record revenue.

Apple now has stores in India and Cook met with the prime minister during his visit. Cook believes India is on the brink of a significant change as people enter the middle class.

Last quarter, sales in China and the US went down by 3% and 8%. Maestri informed investors that revenue growth this quarter would be similar to the March quarter. This means that sales might decrease slightly when compared to the previous year.

Apple has been giving more attention to its services division to increase revenue. It has 975 million subscribers worldwide paying for digital services, such as music, movies and iCloud storage, which is almost double the number from three years ago. This year, 150 million more people joined as subscribers. Maestri calls this Apple's "economic engine" for the future.

Apple's division, which includes App Store payments and licensing fees, increased revenue by 5.5% to $20.1bn. This was as predicted, but slower than the 17% increase from last year. This division makes up 22% of Apple's total revenue. Their profit margins were 71%, compared to 36.7% for hardware.

Apple's other devices didn't sell as well compared to last year. Mac sales went down 31%, worse than predicted. iPad sales also dropped 13%, as predicted. Wearables division sales, including AirPods and Apple Watch, were 1% less. It wasn't just Apple facing a weak PC market.

A person named Dipanjan Chatterjee works as an analyst for Forrester. He said that the fall in sales is a sign of problems to come. He thinks that soon people will become more worried about spending too much money. This could cause problems for companies that sell products to people. They could have a hard time making sales.

He said the excitement of spending during the pandemic has ended.

Someone asked Cook about Apple's work on artificial intelligence. Some people are concerned that Apple is not doing enough in this area compared to Microsoft and Alphabet.

Apple's future relies heavily on AI. The company is steadily incorporating AI and machine learning into its ecosystem. This progress is immense, he said.

Cook said it's important to be deliberate and thoughtful. There are many issues to address. People are talking about them.

Apple is going to spend $90bn on buying shares in the next year. This has been announced by their board. They have already spent nearly $600bn on share buybacks over the past ten years. This information comes from S&P Global Market Intelligence.

The company's stocks increased by 2.4% in after-hours trading. The shares were already up by 33% this year.