Apple reported better-than-expected earnings and sales as demand for the iPhone remains strong amid concerns about inflation and a weak economy.
Apple reported revenue and earnings of $83 billion, or $1.20 per share, for the quarter, beating Wall Street expectations. The report is a positive sign for the company, which lost its position as the world’s most valuable company to oil giant Saudi Aramco earlier this year. The news sent the company’s shares up 2.6% after hours.
Apple CEO Tim Cook said the quarter reflected the company’s “resilience and optimism,” despite the impact of supply constraints and the suspension of sales in Russia. Regardless, he said the results were better than expected.
According to Apple CFO Luca Maestri, demand for the iPhone is not slowing down. According to Apple, iPhone sales totaled $40.7 billion, up 3% from a year earlier and well above the global smartphone market. The company’s wealthy and loyal customer base has helped it weather economic downturns better than others in the past.
However, Maestri said that the economic slowdown is affecting sales of advertising, accessories and household items.
“Fortunately, we have a very large portfolio, so we know we can handle it,” he said.
Parts shortages will continue to limit Mac and iPad sales, but the impact is lessening, Maestri said.
“Apple, primarily a hardware company, may be more directly exposed to supply chain issues than other tech giants that reported earnings this week, but its services business, a key part of its diversification strategy, is also growing. “. Tom, Global Chief Digital Officer of Mindshare Worldwide Johnson said of Apple’s quarterly results:
Apple warned in April that it expected growth to slow despite better-than-expected quarterly results. The company has battled Covid-induced shutdowns and computer chip shortages at its factories in China.
Apple has been more stable than other tech giants announcing job cuts and layoffs. But Bloomberg reported earlier this month that the company plans to cut hiring and spending and be more cautious next year as an expected recession looms. “Apple’s stock reflects a broader slowdown in investment in new things, new companies and new products,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Reuters. “This means that inflation is a problem for these companies.”
Google, Microsoft and Meta have all announced plans to slow down hiring or downsize. Tesla’s Elon Musk said the company will cut 10% of its workforce, while Netflix laid off 300 employees after losing 1 million subscribers earlier this year.
After posting record profits during the pandemic, the industry as a whole has struggled for months with rising interest rates, inflation and slowing economic growth. The tech-focused Nasdaq Composite is already down 26% this year.
Google’s parent company, Alphabet, has reported higher profits than last year, suggesting the company may weather the economic slowdown better than expected. Meanwhile, Meta said it expects the first decline in revenue since the company went public.
Reuters contributed to this report
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