The results exceeded the expectations of Wall Street analysts who had predicted a drop in iPhone sales. Apple has signaled optimism for the current quarter, saying it expects sales growth to accelerate and supply chain challenges to ease.
“Tim Cook and his team threaded the needle masterfully,” said Mike Frazier, president of Bedell Frazier, a Bay Area-based company with $600 million under management that counts Apple among its top holdings. But Frazier said it’s clear that even the affluent Apple customer can cut spending a bit, which will most likely reduce profitability in the future.
Tim Cook, Apple’s chief executive, has bet big on China, consolidating the vast majority of the company’s manufacturing in a country known for its lower-cost labor and business-friendly policies. After the coronavirus outbreak began in 2019, Apple halted iPhone production and lost sales. It then enjoyed steady production as China brought the virus under control while many Western countries grappled with outbreaks.
But China’s ‘zero Covid’ policy, which saw it shut down Shanghai in the spring to quell an outbreak, has again exposed the risks of Apple’s reliance on the country to produce and export its devices. . During the last quarter, production disruptions meant Apple was unable to take full advantage of the release of MacBooks with more powerful processors, some of which went out of stock until August.