Apple is expected to report a decline in revenue for the first time in four years due to strict COVID-19 curbs in China and related protests at its biggest supplier.
Apple has so far avoided mass layoffs in the tech industry due to frugal hiring during the pandemic, but investors will want to know more about how Tim Cook is trying to bolster demand in a weak economy.
“With supply chain challenges largely normalized, we now believe that Apple is entering a period of slower demand due to macro factors, and we expect 2 percent fewer iPhone units to be sold in 2023,” said analyst Krish Sankar.
According to Refinitiv, the world’s biggest public company is expected to report on Thursday that iPhone sales fell in the last quarter of the year. The last time iPhone sales fell was in the fall of 2020 during the COVID-19 epidemic.
The impact of COVID-19 and the Russia-Ukraine war on the economies of Europe and China is expected to have a better effect on iPhone sales in the US.
BofA analyst Wamsi Mohan said that some demand for the iPhone will likely be pushed into the current quarter after supply constraints in the first quarter and lack of product availability during the holiday period.
The services business, a key growth engine for the company and home to Apple’s music and video streaming services, is expected to post its lowest revenue growth for the holiday quarter.
The context is there.
The disruption at the world’s biggest iPhone plant in Zhengzhou, China, triggered a rare warning from Apple in November and limited stocks of its higher-end iPhone 14 models during what is typically its biggest sales quarter, powered by product launches and the holidays.
Greater China, including Hong Kong, contributes roughly a fifth to annual revenue. The total sales forecast was reduced by the tech giant due to an economic downturn in the country.
Apple diversifies its production footprint with plants in India, as well as restarting factories in China, so analysts expect a much faster recovery.
According to analysts at Evercore ISI, commentary from luxury goods companies indicates China is recovering quickly, which means March-quarter Chinese iPhone sales should be better than anticipated.
There is a new version of Thomson Reuters.
Apple launched the iPad Pro (2022) and the iPad (2022) alongside the new Apple TV this week. We discuss the company’s latest products, along with our review of the iPhone 14 Pro on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts. Affiliate links may be automatically generated – see our ethics statement for details.
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