June 16, 2024 5:41 am

Apple sees biggest fall in sales for a year

Apple boss Tim Cook tried to beat back doubts about the future of the tech giant, after it reported its biggest sales fall in more than a year.

Sales slumped 4% year-on-year in the first three months of 2024 to $90.8bn (£72.5bn), weighed down by a sharp drop in demand for iPhones.

Executives said the results were distorted by Covid-related supply disruptions, which led to unusually strong sales during the same period last year.

They said sales would return to growth in the months ahead, noting upcoming product launches and investments in artificial intelligence (AI).

“I couldn’t be more excited in the future we have ahead of us,” Mr Cook said.

In a vote of confidence in the firm’s future, the company said it was setting aside an historic $110bn to buy back shares.

In after-hours trade, the news helped lift demand for the stock, the price of which has dropped more than 6% this year.

But the struggles at the company – which also endured a streak of sales declines for five of the last six quarters – marked a contrast with the wider market.

Globally, smartphone shipments rose 10% in the first three months of the year, expanding after a long lacklustre period, according to research firm Canalys.

At Apple, quarterly sales of iPhone dropped more than 10% year-on-year and sales slipped in every geographic region except for Europe, with the firm’s critical greater China market seeing a fall of 8%.

Mr Cook sought to reassure investors about the state of the business in China, noting that iPhone sales were actually up in “mainland” China.

“I maintain a great view of China in the long term,” he said.

But competition is intensifying, as local rival Huawei mounts a rebound.

Apple is also facing legal battles with regulators in the US and Europe over its app store fees.

A separate anti-monopoly lawsuit in the US against Google threatens the lucrative payments Apple receives from the search giant in exchange for making Google the default search engine on Safari, Apple’s internet browser.

According to court filings, those payments amounted to about $20bn (£15bn) in 2022, a sum that helped lift Apple profits.

Chief financial officer Luca Maestri said Apple sales were expected to rise in the “low single digits” in the three months to June. He said the firm expected double digit growth in its services business, offering more guidance than the company typically provides.

In a research note after the results, Angelo Zino, senior equity analyst at CFRA Research, said they could “change the narrative” for Apple.

“China is holding up better than expected and there are a host of upcoming events/catalysts on the horizon that could improve investor sentiment,” he wrote.

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