Apple continues to thrive as economy slows, despite falling Q3 earnings

BERKELEY, Calif. –

Apple’s profits have tumbled over the past quarter, but the world’s biggest tech company is holding up better than many of its peers as the economy teeters on the brink of recession.

As it grappled with manufacturing headaches and inflationary pressures that vexed a wide range of businesses, Apple saw its profit for the April-June period fall 10% while its revenue edged up. by 2%. Both figures were better than analysts had expected.

The results announced Thursday for Apple’s third fiscal quarter were not a shock. Indeed, Apple had previously warned that its revenue would be depressed by up to $8 billion due to supply chain issues that have been compounded by pandemic-related shutdowns at Chinese factories that make iPhones and devices. other Apple products.

This scenario played out as expected in Apple’s third fiscal quarter. Earnings fell to $19.4 billion, or $1.20 per share, while revenue rose slightly to nearly $83 billion.

The upside surprise helped push Apple’s stock price up 3% in prolonged trading after the numbers were released.

As usual, Apple’s results were driven by the iPhone, which posted a 3% gain in sales compared to the same period last year. Analysts had prepared investors for a slight decline due to supply chain issues and the upcoming release of a new model this fall. This is the seventh consecutive quarter that iPhone sales have increased.

The continued demand for iPhones underscores the enduring appeal of a device that has helped make Apple the world’s most powerful tech company for the past 15 years. Sales of the device rose, despite inflation reaching its highest rate in more than 40 years, a development that caused consumers to limit their spending on a variety of discretionary items such as clothing and other household items that have seen an increase in demand during the pandemic. .

Problems in corporate earnings reports over the past two weeks – combined with other sobering data – have heightened fears that the Federal Reserve’s interest rate hike will counter inflation. does not plunge the economy into a recession. This would weigh on corporate earnings and already falling stock prices.

Apple CEO Tim Cook acknowledged that the Cupertino, California-based company is not immune to the current economic turmoil that is squeezing consumer budgets, but maintained a generally optimistic tone during a conference call Thursday.

“When you think about the number of challenges in the quarter, we’re very pleased with the growth we’ve put in place,” Cook said.

So far, Cook said, inflation appears to be affecting Apple’s wearable tech sales — a segment that includes the Apple Watch — more than the iPhone. In the last quarter, revenue for Apple’s wearables division fell 8% to $8.1 billion.

On the upside, Apple expects supply chain issues to ease in the current July-September quarter. If history is any guide, the release of its next iPhone model later this year could spur a new wave of upgrades. Aople expects its year-over-year revenue growth in the current quarter to top the 2% rise in the prior quarter, according to Luca Maestri, Apple’s chief financial officer.

Technology stocks were particularly affected by market jitters. The Nasdaq Composite Index, which is tied to the fortunes of the tech industry, has fallen 22% so far this year. Apple had held up much better than most of its tech peers, with its stock price down 11% this year ahead of Thursday’s rally in extended trading.

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