Apple CEO Tim Cook holds a new iPhone 15 Pro during the Wonderlust project launch event at the company’s headquarters in Cupertino, California, Sept. 12, 2023.
Loren Elliott | Reuters
Apple reported fourth fiscal quarter earnings on Thursday that beat analyst expectations for sales and earnings per share, but revealed that overall sales fell for the fourth quarter in a row. Every hardware business outside the iPhone declined year-over-year, with big drops in the iPad and Mac segments.
Apple highlighted stronger-than-expected 16% growth in its online services division to make up for weakness in hardware sales.
Apple shares fell less than 1% in extended trading.
Here’s how Apple did, versus LSEG (formerly Refinitiv) consensus expectations:
EPS: $1.46 per share, versus $1.39 per share expected
Revenue: $89.50 billion, versus $89.28 billion expected
iPhone revenue: $43.81 billion, versus $43.81 billion expected
Mac revenue: $7.61 billion versus $8.63 billion expected
iPad revenue: $6.44 billion, versus $6.07 billion expected
Wearables revenue: $9.32 billion, versus $9.43 billion expected
Services revenue: $22.31 billion, versus $21.35 billion expected
Gross margin: 45.2% versus 44.5% expected
Apple didn’t give formal guidance, but CFO Luca Maestri usually provides data points on the earnings call. Analysts are looking for $122.98 billion in revenue for the December quarter, which would be a return to year-over-year growth in Apple’s most important quarter.
Net income was $22.96 billion, versus $20.72 billion in net income a year ago. For Apple’s entire fiscal year, it reported $383.29 billion in sales, down about 3% from Apple’s fiscal 2022. Quarterly revenue declined less than 1% in the September quarter.
The company’s iPhone sales were in line with Wall Street expectations and increased more than 2% from last year. It was the only hardware line for Apple to show growth in the quarter, and the period only included about a week of iPhone 15 sales.
Apple CEO Tim Cook told CNBC that the iPhone 15 was doing better than the iPhone 14 did during the September quarter last year.
“If you look at iPhone 15 for that period of time and compare it to iPhone 14 for the same time in the year-ago quarter, iPhone 15 did better than iPhone 14,” Cook told CNBC’s Steve Kovach. He added that Apple’s more expensive Pro and Pro Max iPhones were supply constrained because of high demand.
Apple’s Mac and iPad businesses both suffered during the quarter. Maestri, Apple’s CFO, had warned on a call with analysts after third-quarter results that iPad and Mac sales would fall by double-digit percentages.
Mac sales came in below Wall Street expectations, falling nearly 34% on an annual basis. Apple held an unusual nighttime launch event for its new MacBook Pro laptops and iMac desktop last month. While sales of the new devices aren’t included in the quarter, Apple was signaling that new products could boost sales once again thanks to its new M3 chips.
Cook told CNBC that the Mac comparison is to “an all-time record” fourth quarter, which followed a huge supply disruption and pushed what would have been third-quarter sales into the last quarter of 2022. “So, the comparison point here is very difficult,” he said.
“I think the Mac is going to have a significantly better quarter in the December quarter. We’ve got the M3, we’ve got the new products, and we don’t have the compare phenomenon on a year-over-year basis,” Cook said, referring to an unusually strong market for Macs in 2022.
Cook said that that overall market for personal computers is “challenging.”
Revenue from iPads was also down big, declining 10% from the same period last year. Apple did not announce new products ahead of the holiday season this year.
Apple’s services business was a bright spot. Apple recorded $22.31 billion in services revenue, outpacing analyst expectations and increasing over 16% on an annual basis.
Apple’s services division includes online subscriptions like iCloud storage and Apple Music, as well as warranties from AppleCare. A big chunk of Apple’s services business comes from its deal with Google for the default search engine on Apple’s browser, Safari, which has been highlighted in recent weeks as part of the Department of Justice antitrust case against Google. That payment to Apple is worth an estimated $19 billion this year.
Cook said services components including App Store sales, advertising (including the Google deal), iCloud, payment services, and Apple Music did well in the quarter and hit an internal Apple record, signaling continued growth.
“Every main service hit a record,” Cook said.
Maestri also noted in a statement that Apple’s installed base of devices, or the number of iPhones, Macs, and iPads currently in active use, reached an all-time high during the quarter, although Apple did not give an exact number. Analysts say that growth in Apple’s installed base signals future growth in its services division.
Cook said that Apple had over a billion paid subscriptions, which include both Apple’s own services as well as apps on the App Store that bill on a recurring basis.
Apple’s wearables business unit includes headphones like the company’s AirPods as well as Apple Watch sales. It, too, shrank year-over-year, dropping over 3% on an annual basis.
Apple’s business in Greater China, its third largest market, is under the microscope as investors worry about increased competition from Huawei. Greater China sales were basically flat year-over-year, and Apple reported $15.08 billion from the region, which includes Hong Kong and Taiwan.
The company continues to have a huge amount of cash and cash-like securities on hand, even as it strives to offset its cash pile with debt. Apple said it had $162.1 billion in cash on hand on Thursday.
Apple said it would pay a dividend of 24 cents per share this month and said the company had spent $25 billion during the quarter on share repurchases and dividends.
Altimeter Capital CEO Brad Gerstner said Thursday that he’s moving out of the “bomb shelter” with Nvidia and into a position of safety, expecting that the chipmaker is positioned to withstand President Donald Trump’s widespread tariffs.
“The growth and the demand for GPUs is off the charts,” he told CNBC’s “Fast Money Halftime Report,” referring to Nvidia’s graphics processing units that are powering the artificial intelligence boom. He said investors just need to listen to commentary from OpenAI, Google and Elon Musk.
President Trump announced an expansive and aggressive “reciprocal tariff” policy in a ceremony at the White House on Wednesday. The plan established a 10% baseline tariff, though many countries like China, Vietnam and Taiwan are subject to steeper rates. The announcement sent stocks tumbling on Thursday, with the tech-heavy Nasdaq down more than 5%, headed for its worst day since 2022.
The big reason Nvidia may be better positioned to withstand Trump’s tariff hikes is because semiconductors are on the list of exceptions, which Gerstner called a “wise exception” due to the importance of AI.
Nvidia’s business has exploded since the release of OpenAI’s ChatGPT in 2022, and annual revenue has more than doubled in each of the past two fiscal years. After a massive rally, Nvidia’s stock price has dropped by more than 20% this year and was down almost 7% on Thursday.
Gerstner is concerned about the potential of a recession due to the tariffs, but is relatively bullish on Nvidia, and said the “negative impact from tariffs will be much less than in other areas.”
He said it’s key for the U.S. to stay competitive in AI. And while the company’s chips are designed domestically, they’re manufactured in Taiwan “because they can’t be fabricated in the U.S.” Higher tariffs would punish companies like Meta and Microsoft, he said.
“We’re in a global race in AI,” Gerstner said. “We can’t hamper our ability to win that race.”
YouTube on Thursday announced new video creation tools for Shorts, its short-form video feed that competes against TikTok.
The features come at a time when TikTok, which is owned by Chinese company ByteDance, is at risk of an effective ban in the U.S. if it’s not sold to an American owner by April 5.
Among the new tools is an updated video editor that allows creators to make precise adjustments and edits, a feature that automatically syncs video cuts to the beat of a song and AI stickers.
The creator tools will become available later this spring, said YouTube, which is owned by Google.
Along with the new features, YouTube last week said it was changing the way view counts are tabulated on Shorts. Under the new guidelines, Shorts views will count the number of times the video is played or replayed with no minimum watch time requirement.
Previously, views were only counted if a video was played for a certain number of seconds. This new tabulation method is similar to how views are counted on TikTok and Meta’s Reels, and will likely inflate view counts.
“We got this feedback from creators that this is what they wanted. It’s a way for them to better understand when their Shorts have been seen,” YouTube Chief Product Officer Johanna Voolich said in a YouTube video. “It’s useful for creators who post across multiple platforms.”
CEO of Meta and Facebook Mark Zuckerberg, Lauren Sanchez, Amazon founder Jeff Bezos, Google CEO Sundar Pichai, and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. president in the U.S. Capitol Rotunda in Washington, Jan. 20, 2025.
Saul Loeb | Via Reuters
Technology stocks plummeted Thursday after President Donald Trump’s new tariff policies sparked widespread market panic.
Apple led the declines among the so-called “Magnificent Seven” group, dropping nearly 9%. The iPhone maker makes its devices in China and other Asian countries. The stock is on pace for its steepest drop since 2020.
Other megacaps also felt the pressure. Meta Platforms and Amazon fell more than 7% each, while Nvidia and Tesla slumped more than 5%. Nvidia builds its new chips in Taiwan and relies on Mexico for assembling its artificial intelligence systems. Microsoft and Alphabet both fell about 2%.
The drop in technology stocks came amid a broader market selloff spurred by fears of a global trade war after Trump unveiled a blanket 10% tariff on all imported goods and a range of higher duties targeting specific countries after the bell Wednesday. He said the new tariffs would be a “declaration of economic independence” for the U.S.
Companies and countries worldwide have already begun responding to the wide-sweeping policy, which included a 34% tariff on China stacked on a previous 20% tax, a 46% duty on Vietnam and a 20% levy on imports from the European Union.
China’s Ministry of Commerce urged the U.S. to “immediately cancel” the unilateral tariff measures and said it would take “resolute counter-measures.”
The tariffs come on the heels of a rough quarter for the tech-heavy Nasdaq and the worst period for the index since 2022. Stocks across the board have come under pressure over concerns of a weakening U.S. economy. The Nasdaq Composite dropped nearly 5% on Thursday, bringing its year-to-date loss to 13%.
Trump applauded some megacap technology companies for investing money into the U.S. during his speech, calling attention to Apple’s plan to spend $500 billion over the next four years.