Apple is hurting this quarter because of the iPhone and China. Big news comes from the services division.
Apple released its latest quarterly results for January to March 2024. It earned $90.8 billion in those months, down 4% from last year, which is unusual for the company to earn less year over year.
There are a few surprises in the breakdown of these results: the iPhone fell, the iPad went a year without updates, business in Asia and Oceania is slowing, and the services division is holding on to furniture to avoid an even worse quarter.
Because it’s important. Apple is the second largest listed company in the world after Microsoft. The development of their accounts is key in the industry, and the temperature of their divisions gives us an accurate idea of their current status. Both for the company as a whole and for each area of its activity.
iPhone crash context. iPhone sales fell 10% compared to the same quarter in 2023, meaning Apple earned $5.4 billion less. A rarity, and even more so in the case of the iPhone 15, with good reception and the expected transition to USB-C.
Tim Cook has given an explanation that, although it only tells part of the story, is convincing: a year ago Apple replaced stock iPhone after supply disruptions caused by the latest blow of the pandemic. This satisfied pent-up demand, and iPhones were sold more than usual: this quarter and part of the previous one.
The current comparison is offensive, and since the iPhone is half of Apple, the problem extends to the full results.
Other divisions. Aside from the iPhone, there’s not much else to celebrate…except for one thing.
- Mac grew 4%
- iPad sinks, losing 17%
- “Home, Wearables and Accessories” retains 10%
- Services save votes, growing 14%
Services is already Apple’s second-largest division by revenue, not third, and each passing quarter has further cemented the great success Apple has made by focusing on that to support growth. This quarter he served as a proofreader.
Regional inequality. While the Americas (including north, center and south) and Europe regions were little changed (-1% and +1% respectively), the rest saw significant declines. In Greater China (including mainland China, Taiwan and Hong Kong), Japan and the rest of the Asia-Pacific region, the decline was 8%, 13% and 17%, respectively. The case of China deserves special mention. Of this amount, $1.4 billion is taken from there.
“Europe”, by the way, can lead to confusion. Thus, Apple refers to all countries on the European continent (including those that are not part of the EU, such as the UK and Norway), as well as the entire African continent, the Middle East and India.
Tim Cook on the future. A routine call with investors after the presentation allowed the Apple CEO to anticipate what’s coming next, both at the May 7 event and at WWDC. Of course, this has to do with AI. An excerpt of his words:
We remain very optimistic about our capabilities in the field of generative artificial intelligence. We are making important investments and hope to share some very exciting things with our customers soon.
We believe in the transformative power and capabilities of artificial intelligence and believe we have advantages that will differentiate us in this new era, including the unique combination of seamless integration of Apple hardware, software and services, innovative Apple Silicon with our leading neural engines industry and our unwavering focus on privacy, which underpins everything we create. (…)
Cook also weighed in on the Vision Pro, highlighting the interest it has attracted from major US companies, although he made no mention of its presence in other countries such as Spain, which does appear on the list of countries that have brought the company a record profit. We will have to wait a little longer for the futuristic device to arrive in our country.
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Featured Image | Xataka with Midjourney