Apple on Thursday gave a sales forecast for the holiday quarter that missed Wall Street expectations, hurt by weak demand for iPads and wearables, sending its shares down about 3% in after-hours trading.
Chief Executive Tim Cook insisted that the company’s new iPhone 15 models were doing well in China, seeking to ease Wall Street worries that Apple was losing market share to a resurgent Huawei and other local smartphone sellers. Apple’s revenue from China dipped 2.5% overall in the fiscal fourth quarter ended Sept. 30, though Cook said it grew after accounting for foreign-exchange rates.
Chief Financial Officer Luca Maestri told analysts on a conference call that sales for the current quarter, which includes the Christmas holidays and when Apple typically has its biggest sales of new iPhone models, will be similar to the previous year. Wall Street had expected a forecast for a rise in sales of 4.97% to $122.98 billion.
Apple shares, which have risen 37% so far this year, dropped 3.4% after-hours, following the forecast.
Maestri said Apple expects to have higher iPhone sales for the fiscal first quarter, even though this year’s holiday quarter has one fewer week of sales than the year-ago.
“I’d say it was surprising to see how confident Tim Cook was on future China performance given the many potential geopolitical challenges that we know exist for that market,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
Apple on Thursday reported sales and profit for the fiscal fourth quarter that beat Wall Street expectations, helped by an uptick in iPhone sales and a $1 billion boost to services revenue that offset large drops in Mac and iPad sales.
Cook said the company’s new high-end handset models – the iPhone 15 Pro and Pro Max devices – are facing supply constraints.
The Cupertino, California-based company has navigated a global smartphone slump better than many of its rivals, but faces an uneven economic recovery in China, a key market.
“While we believe investors should breathe a sigh of relief because sales and profits both exceeded expectations, the upside was small and we were concerned to see weak sales from China,” DA Davidson analyst Tom Forte said.
Apple said sales for the most recent quarter fell roughly 1% to $89.50 billion, but beat analyst estimates of $89.28 billion, according to LSEG data. Net income rose about 11%. Profit per share of $1.46 beat analyst expectations of $1.39 per share, according to LSEG.
Apple is facing tougher competition in the smartphone market this year as Huawei Technologies returns to the field with new phones powered by Chinese-made chips after being all but shut out of the market for several years by U.S. government trade curbs.
Apple’s sales in China fell to $15.08 billion from $15.47 billion in the fourth quarter a year ago. Cook said that after accounting for foreign-exchange rates, Apple’s business in China grew year-over-year, driven by iPhone sales and services revenue.
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