Analysts expect Apple to post its first year-over-year revenue decline since 2019’s March quarter when it reports earnings on Thursday. There are a few contributing factors.

The company couldn’t build enough of its high-end iPhones when its primary assembly facility in China was shut down for weeks during Covid lockdowns. Customers in many regions noticed as early as November that Apple couldn’t promise Christmas delivery of a new iPhone.

Apple gave a rare warning to investors that month explaining that production issues would result in lower shipments than “previously anticipated.” It was a data point that caused many analysts watching the stock to cut their estimates.

“We believe the peak impact of the disruptions was felt in early to mid November as wait times hit an extreme level (link) as the wait time in the US for the 14 Pro and 14 Pro Max reached 34 days while wait time in China at the high-end hit 36 days,” UBS analyst David Vogt wrote in January.

Analysts polled by Refinitiv expect Apple to report just over $121 billion in revenue in the December quarter, which would be a slight decline from the company’s $123.9 billion from a year ago.

But the problems aren’t Apple-specific. The PC and smartphone markets are slumping as consumers and businesses digest sales from the pandemic and cut costs to prepare for a possible recession.

The smartphone market saw an 18% decline in shipments in the fourth quarter, according to IDC, the worst decline ever recorded by the market research firm. The PC market fell 28% in the fourth quarter, according to the company. But many investors believe that Apple is outperforming its competitors even in a contracting market.

“While the state of consumer demand remains a near-term concern, we believe the underlying drivers of Apple’s model – a growing installed base and spend per user – remain intact, and that the strength/stability of Apple’s ecosystem remains undervalued,” Morgan Stanley analyst Erik Woodring wrote in a note earlier this month.

Here’s what Wall Street is expecting, according to Refinitiv consensus estimates:

• Revenue: $121.19 billion
• Earnings per share: $1.94 per share
• iPhone revenue: $68.29 billion
• iPad revenue: $7.76 billion
• Mac revenue: $9.63 billion
• Other products revenue: $15.26 billion
• Services revenue: $20.67 billion

If management commentary is soft, investors looking for a silver lining might want to look at Apple’s services business, which is profitable and has been growing strongly for years. However, several data points in the fourth quarter, including Apple’s own App Store payouts, suggest a significant slowdown in App Store growth, although analysts are split on its severity.

The App Store is one of the largest components of services, but it’s only a part of the business, which includes online subscriptions, warranties and search licensing fees. Apple shares could push higher if services such as Apple TV+ and Apple Music look like they’re generating a higher percentage of Apple’s revenue, D.A. Davidson analyst Tom Forte wrote in January.

Services are expected to total $20.67 billion in the December quarter, according to Refinitiv estimates, representing a 5.9% growth rate.

Analysts will also watch to see if the strong dollar continues to hurt Apple, given that so much of its sales are overseas. During the December quarter, the British pound, the Canadian dollar and the Japanese yen all weakened compared to the dollar. Apple management previously said the strong dollar would be a 10 percentage point drag on sales growth.

Apple will slow the pace of iPad releases for the rest of 2023, with an eye towards releasing a foldable iPad by 2024, noted Apple analyst Ming-Chi Kuo wrote on Monday.

“I’m positive about the foldable iPad in 2024 and expect this new model will boost shipments and improve the product mix,” Kuo wrote on Twitter. Kuo’s prediction aligns with a report from analyst firm CCS Insight, which wrote in Oct. 2022 that the Cupertino company would launch a foldable iPad before a foldable iPhone.

Several other manufacturers, including Lenovo and Samsung, make laptops or phones with full-size foldable displays. Apple has so far shied away from taking advantage of OLED technology in the same way. Rival Samsung has released multiple foldable phones but Apple has maintained the rectangular shape of the iPhone since its launch.

“Right now it doesn’t make sense for Apple to make a foldable iPhone. We think they will shun that trend and probably dip a toe in the water with a foldable iPad,” Ben Wood, chief of research at CCS Insight told CNBC in a 2022 interview.

In 2021, Kuo had predicted the release of a foldable iPhone in 2024, the same year he now predicts a foldable iPad to launch instead.

Kuo expects that a foldable iPad to feature a carbon fiber kickstand sourced from Chinese manufacturer Anjie Technology.

A representative for Apple did not immediately respond to a request for comment.

Kuo is one of the most prolific and respected Apple analysts. The analyst has predicted multiple details on the iPhone SE 3, the 2021 MacBook Pro, and on numerous iPad releases which have been substantiated at launch. Most recently, Kuo predicted a delayed launch for Apple’s highly-anticipated mixed reality headset.

TikTok CEO Shou Zi Chew will testify before a House panel on March 23 about the app’s security and privacy practices and its ties to China through parent company ByteDance.

The House Energy and Commerce Committee announced the hearing on Monday, saying it would be Chew’s first appearance before a congressional panel.

“ByteDance-owned TikTok has knowingly allowed the ability for the Chinese Communist Party to access American user data,” E&C Chair Cathy McMorris Rodgers, R-Wash., said in a statement. “Americans deserve to know how these actions impact their privacy and data security, as well as what actions TikTok is taking to keep our kids safe from online and offline harms.” 

The hearing announcement comes as the company’s negotiations with U.S. government over how to secure its app in the country have continued to drag. TikTok has been engaging with the Committee on Foreign Investment in the U.S., which can determine if certain risk mitigation measures are adequate to dampen national security concerns.

Still, those negotiations have reportedly been delayed at least as of last month, as officials continue to worry about the implications of the app’s ownership by Chinese parent company ByteDance. That’s because Chinese-based companies can be compelled to hand over data to the government there on request. In the past, TikTok has assured U.S. officials and lawmakers that it does not store U.S. user data in China to mitigate that risk, but that’s done little to assuage fears.

Fears over TikTok’s national security and privacy implications for consumers have spanned both sides of Congress, and stretched across the Trump administration into the Biden administration.

Lawmakers passed a ban on TikTok on government devices in a year-end legislative package, citing security fears. A TikTok spokesperson called the passage of the bill “a political gesture that will do nothing to advance national security interests,” in a statement at the time, adding that the agreement CFIUS was reviewing would “meaningfully address any security concerns that have been raised at both the federal and state level.”

TikTok did not immediately respond to a request for comment on the House hearing.

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