Oct 27 (Reuters) – Apple Inc ( AAPL.O ) on Thursday reported revenue and profit that topped Wall Street targets, one of the few bright spots in a technology sector hit by cuts due to inflation.
The forecast for the holiday quarter was more gloomy. While not giving specific numbers, Apple said sales growth would fall below 8% in the December quarter, but not as far as Amazon.com AMZN.O, whose dire holiday outlook sent shares down 1[ads1]4%.
Apple shares initially fell in after-hours trading, but recovered into positive territory.
The Cupertino, California-based tech giant was saved by its oldest technology, its laptops, while its star, the iPhone, stumbled.
While iPhone sales weren’t as strong as some analysts had targeted, they were still a record for the September quarter. Mac sales of $11.5 billion were far ahead of analyst estimates of $9.36 billion.
Apple’s results showed some resilience in the face of a weak economy and strong US dollar that have led to disastrous reports from many tech companies. Like Facebook parent Meta ( META.O ) and Snap ( SNAP.N ), Apple is seeing softness in ad spending. Overall, Apple said quarterly revenue rose 8% to $90.1 billion, topping estimates of $88.9 billion, and net income was $1.29 per share, topping the average analyst estimate of $1.27 per share, according to Refinitive data.
“We did better than we expected, despite foreign exchange being a significant negative for us,” said chief financial officer Luca Maestri.
The rising US dollar has hit many companies like Apple that generate significant foreign revenue and get less money back when they convert it. For consumers, it increases the price of new devices when purchased in countries outside the United States.
Apple’s iPhone sales for the company’s fiscal fourth quarter rose to $42.6 billion, when Wall Street expected sales of $43.21 billion, according to Refinitiv IBES.
Maestri said iPhone sales set a record for the September quarter, improving 10% from the previous quarter and beating the company’s forecast.
“The iPhone number is a touch of the turmoil and uncertainty in the market, but Apple has different ways of compensating,” says Runar Bjorhovde, research analyst at the market research firm Canalys.
Sales of Apple’s Mac computers received a boost from this summer’s introduction of redesigned MacBook Air and MacBook Pro laptops. New tablets went on sale this week.
Apple said its gross margin of 43.3% was a record for the September quarter.
Maestri said the robust computer sales also reflected an order backlog, caused by a prolonged shutdown at one of the factories that make Macs, which Apple was able to fill in the quarter.
The company reported that sales of iPads were $7.2 billion, compared to the average estimate of $7.94 billion.
Apple wearables such as AirPods and other accessories achieved sales of $9.7 billion, slightly ahead of Wall Street’s forecast of $9.2 billion.
“They said they didn’t have particular problems with supply, so it seems to be a thing of the past,” said Creative Strategies consumer analyst Carolina Milanesi.
Growth in the company’s services business, which has boosted sales and profits in recent years, rose to $19.2 billion in revenue, below estimates of $20.10 billion.
Maestri said Apple was experiencing softness in digital advertising and games, as were others in the sector.
“Like other major technology companies, even Apple is suffering from the negative impact of a worsening macro backdrop and ongoing supply chain issues, although it has done a better job of navigating through the challenging environment,” Jesse Cohen, senior analyst at Investing.com.
In China, which has experienced a sharp economic slowdown, Apple reported sales of $15.5 billion in the fourth quarter. It is a gain from the previous quarter, when Apple had sales of 14.6 billion dollars.
Apple said it now has 900 million paying subscribers to its services, up from 860 million in the previous quarter.
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Reporting by Dawn Chmielewski in Los Angeles and Nivedita Balu in Bengaluru; Editing by Peter Henderson and Lisa Shumaker
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