Apple Sales Miss Estimates on Sluggish Economy, Supply Snags

(Bloomberg) —

Apple Inc. reported a steeper sales decline in its holiday period than Wall Street feared, showing the toll of an economic slowdown and lingering supply snags.

Revenue in the fiscal first quarter amounted to $117.2 billion, the company said in a statement Thursday. That compared with Wall Street projections of about $121.1 billion. The shares fell in extended trading.

The results show that Apple hasn’t been able to dodge the tech slowdown afflicting many of its competitors. Demand for smartphones and computers has slumped in the past year, and Covid-19 restrictions in China added to Apple’s woes during the holiday sales period. Timing was another issue: The company didn’t launch new Macs and HomePods until recent weeks, missing the end of the first quarter.

Earnings came in at $1.88 per share, compared with an average estimate of $1.94 per share. The Cupertino, California-based technology giant didn’t provide a revenue outlook for the second quarter, continuing an approach it adopted at the start of the Covid pandemic in 2020.

Read more: How Apple timed the launch of its new Macs, HomePod

Apple shares had closed up 3.7% at $150.82 in New York. They have gained 16% this year.

Chief Executive Officer Tim Cook cited a “challenging environment” in the statement. “We remain focused on the long term,” he said.

Apple generated $65.8 billion from its flagship product, the iPhone, missing the estimate of $68.3 billion. That also represents a decline the $71.6 billion that the product brought in a year earlier. While the latest iPhone was a more significant leap than the previous version, the factories producing the popular Pro models in China were shuttered for several weeks during the quarter due to pandemic restrictions.

The company made $7.74 billion from the Mac, well short of the $9.7 billion estimate. That’s also a significant drop from $10.9 billion a year ago.

It was a tough year-over-year comparison given that Apple launched a revamped MacBook Pro line in the previous holiday period. This time around, it didn’t update the MacBook Pro and Mac mini models until the current quarter.