By Dawn Chmielewski and Nivedita Balu
(Reuters) – Apple Inc reported revenue and profit on Thursday that beat Wall Street targets, one of the few bright spots in a technology sector hit by spending cuts due to inflation.
The forecast for the holiday quarter was more gloomy. While not providing specific numbers, Apple said revenue growth would fall below 8% in the December quarter, but didn’t go as far as Amazon.com, whose dismal Christmas outlook sent its shares down 14%.
Apple shares initially fell in after-hours trading but rebounded into positive territory.
The Cupertino, California-based tech giant was saved by its oldest technology, its laptops, while its star, the iPhone, stumbled.
Although iPhone sales weren’t as strong as some analysts had suggested, they were still a record for the September quarter. Mac sales of $11.5 billion were well above analyst estimates of $9.36 billion.
Apple’s results showed some resilience in the face of a weak economy and strong US dollar that has led to disastrous reports from many tech companies. Like the parent company of Facebook, Meta and Snap, Apple is noticing a weakness in ad spending. Overall, Apple said quarterly revenue rose 8% to $90.1 billion, above estimates of $88.9 billion, and net profit was $1.29 per share, beating analysts’ median estimate. of $1.27 per share, according to Refinitiv data.
“We did better than we expected, despite the fact that the exchange rate was very negative for us,” chief financial officer Luca Maestri said.
The rise of the US dollar has affected many companies, such as Apple, which generate substantial income abroad and get less cash back when they convert it. For consumers, the price of new devices increases when purchased in countries outside of 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 year-ago quarter and beating the company’s forecast.
“The iPhone number is an indication of the turmoil and uncertainty in the market, but Apple has different ways to compensate,” said Runar Bjorhovde, a research analyst at market research firm Canalys.
Sales of Apple’s Mac computers got a boost with the introduction this summer of the 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 strong PC sales also reflected a backlog of orders, caused by a prolonged shutdown at one of the factories that makes Macs, that Apple was able to complete in the quarter.
The company reported iPad sales at $7.2 billion, compared with the median estimate of $7.94 billion.
Apple’s wearable devices like AirPods and other accessories posted sales of $9.7 billion, slightly above Wall Street’s forecast of $9.2 billion.
“They said they didn’t have a particular problem with supply, so it seems to be a thing of the past,” said Carolina Milanesi, a consumer analyst at Creative Strategies.
Growth in the company’s services business, which has boosted sales and profits in recent years, saw revenue rise $19.2 billion, below the estimate of $20.1 billion.
Maestri said Apple experienced weakness in digital advertising and games, as did others in the industry.
“Like other big tech companies, even Apple is feeling the negative impact of the worsening macroeconomic backdrop and ongoing supply chain issues, though it has done a better job of navigating through the challenging environment,” Jesse Cohen, Senior Analyst from Investing.com.
In China, which has experienced a sharp economic slowdown, Apple reported fourth-quarter sales of $15.5 billion. That’s a gain from the previous quarter, when Apple posted sales of $14.6 billion.
Apple said it now has 900 million paying subscribers to its services, up from 860 million 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)