(News Bulletin 247) – The Apple group published revenues lower than analysts’ expectations in China and delivered cautious outlooks for the current quarter. Which relegates good results to the background.

Deprived of its title of largest global capitalization by Microsoft for several weeks, Apple is having difficulty seducing the market again.

The Cupertino group may have delivered generally good quarterly results, with a return to growth for the first time in a year, but the market only retains the negative points of its copy.

Apple shares thus showed a drop of 3% in post-market trading on Wall Street, confirming that of the five Gafams (Alphabet, Apple, Meta, Amazon, Microsoft), the Apple group is the most popular. barely on the stock market at the start of the year.

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Disappointing forecasts

Two elements weighed down the title. First of all, the company dampened analysts’ expectations for the quarter ending in March, that is to say Apple’s second fiscal quarter.

Chief Financial Officer Luca Maestri explained that revenue in this period would be significantly lower than in the same period in 2023 because Apple was then able to quickly sell iPhones to replenish inventory and satisfy “pent-up demand, which had not could previously be served due to logistical tensions.

By removing this exceptional item, which the manager estimated at $5 billion, the group expects stable revenues and sales over the period, he indicated, according to comments reported by Bloomberg.

Which means that Apple anticipates, for the second quarter, revenues of less than $90 billion and iPhone sales of around $46 billion. However, according to Reuters, analysts were expecting $96 billion in revenue and $50 billion in iPhone sales respectively. The group would de facto publish its worst second quarter since 2020, when Covid and confinements weighed down its activity.

Competition in China fiercer than ever

The other black spot in Apple’s publication comes from China, which now represents 18% of the group’s sales. Apple’s revenue in the country fell 13% year-over-year in the October-December quarter to $20.82 billion, still below the consensus estimate of $23.5 billion. by Bloomberg.

Which confirms what investors have feared for several months now: Apple is losing market share in China to its rivals, notably Huawei, which launched a new range of smartphones last year. Chinese authorities are also putting pressure on consumers by, for example, banning civil servants from using foreign smartphones in the office.

“China is the most competitive market in the world and that’s not changing,” Tim Cook, Apple’s chief executive, told Reuters. The executive explained that, excluding currency effects, iPhone sales in China had fallen “in a mid-single digit range”, that is to say between 4% and 6%, from October to December.

“Apple faces competitive pressures in China which are not only due to Huawei but also to foldable smartphones, which is a very popular and fast-growing segment and we all know that Apple does not have a foldable device “, Nabila Popal, analyst at IDC, explained to the agency.

The poor trend in China likely continued into early 2024, with Jefferies analysts estimating that iPhone sales fell 30% in the first week of the year. The bank then estimated that the group would see a decline in sales in China of more than 10% in 2024.

“Our supply chain reviews continue to indicate that iPhone sales are expected to be up slightly in fiscal 2023-2024, in stark contrast to Wall Street forecasts of a steady decline in number of units in the coming year,” said Dan Ives of Wedbush.

Services below expectations

Outside of China, Apple delivered a generally satisfactory performance over the period from October to December.

The company’s total revenue stood at $119.75 billion, up 2% year-on-year, when net earnings per share stood at $2.18 per share. According to Dan Ives, the consensus was for revenues of $118 billion and earnings per share of $2.10. iPhone sales also exceeded expectations ($69.7 billion versus $67.82 billion expected).

A small failure all the same in its services division which brings together subscriptions like AppleTV+ and Apple Music, but especially the App store, which is closely monitored by analysts. Revenues came in at $23.12 billion versus expectations of $23.35 billion.

Recently switched to purchase, Bank of America believes that Apple could raise its head in the coming months by benefiting from a cycle of device switching on the part of its iPhone users. This cycle would be precipitated by the introduction of features fueling generative artificial intelligence with a new phone (the hypothetical iPhone 16) that would be shaped to accommodate these technologies.