Cupertino megacap Apple Inc (NASDAQ:AAPL, ETR:APC), the newly instated second-largest company in the world after losing the top spot to Microsoft, highlighted the good and the bad in its first-quarter results for the three months ending December 30, 2023.
Devices revenues were definitely the weak link.
In a quarter starting a few days after the launch of the iPhone 15, iPhone sales increased 7% year on year, with Mac sales inching 1% higher.
These comparatives were particularly underwhelming considering the negative sales trend witnessed in the previous year’s first quarter.
iPad revenues were down 25% (a tough comparable in fairness, considering the launch of the M2 iPad Pro and the 10th generation iPad in the first quarter of 2023), while wearables, home and accessories sales were down 11%.
Chinese iPhone sales were down in the mid-single digits, underscoring the issues Apple is facing in this key market.
Record services revenues
Services revenues were a different story, with Apple setting an all-time quarterly record of $23.1 billion, representing an 11% year-on-year increase.
The group achieved records across advertising, cloud services, payment services and video, as well as December quarter records for the App Store and AppleCare.
Apple keeps quiet on AI
There was one acronym noticeably absent from reporting materials and the shareholder call, and that was AI.
When asked by a shareholder about Apple’s plans for integrating artificial intelligence (AI) into its devices, chief executive Tim Cook stated: “Let me just say that, I think there's a huge opportunity for Apple with GenAI and AI.”
He provided no further comments.
Apple is increasingly being seen as being on the back foot in the evolving AI space, particularly in comparison to Microsoft Corp (NASDAQ:MSFT), so Cook’s elusive comments on the company’s AI strategy may have raised some eyebrows among stakeholders.
Commenting on the quarterly results in general, chief financial officer Luca Maestri said: “Our December quarter top-line performance combined with margin expansion drove an all-time record earnings per share of $2.18, up 16% from last year.
“During the quarter, we generated nearly $40 billion of operating cash flow, and returned almost $27 billion to our shareholders.
“We are confident in our future, and continue to make significant investments across our business to support our long-term growth plans.”
China was the only market to see a fall in sales, down 13% to $20.8 billion.
Americas sales crept 2% higher to $50.4 billion, Europe grew 10% higher to $30.4 billion and Japan 15% higher to $7.8 billion.
Apple declared a $0.24 quarterly dividend.
Market underwhelmed
Market reactions to Apple’s first quarter have been underwhelming, with shares predicted to open 3% lower when trading commences on Friday.
In comparison, Facebook (NASDAQ:META) parent Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) is expected to open 15% higher following its latest earnings beat, while Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ) shares are approaching two-year highs after outstripping analysts’ expectations in the fourth quarter.