Apple Shares Fall, Amid Weak iPhone Sales

Apple has delivered a solid Q3 financial performance, but investors took fright at number of issues including a third consecutive quarter of sales decline.

Apple’s Q3 profits rose modestly, but revenues declined modestly as the firm reported sales declines across its iPhone, Mac and iPad line ups during the three month period.

Apple did not provide any official guidance going forward (it hasn’t since 2020 due to ‘uncertainty’), but CFO Luca Maestri did state the firm expects year-on-year revenue in Q4 (ending in September), to be similar to the revenue decline in Q3.

Q3 financials

That forecast from the CFO was below analyst expectations of approximately flat Q4 sales of $90.2bn, according to Refinitiv data.

This gloomier than expected guidance resulted in Apple shares falling more than 2 percent in extended trading on Thursday.

But exploring Apple’s financial performance in Q3, is this investor concern actually justified?

For the third quarter ending 1 July, Apple posted a very healthy profit of $19.9bn, marginally up from $19.4bn in the same year-ago quarter.

Sales however fell 1.4 percent to $81.8bn from $82.9bn a year earlier. Yet that beat analyst expectations of $81.69bn, according to IBES data from Refinitiv.

“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Tim Cook, Apple’s CEO.

“From education to the environment, we are continuing to advance our values, while championing innovation that enriches the lives of our customers and leaves the world better than we found it,” said Cook.

Weak iPhone sales

Digging a little further into the performance across Apple’s product lines, it is clear Apple is contending with weaker iPhone sales, despite a sales increase of its smartphones in China.

Apple reported iPhone revenue down 2 percent at $39.7bn (below the $39.91bn that had been estimated), as the world awaits the arrival of the iPhone 15 in September.

Mac revenue meanwhile was down 7 percent at $6.84bn ($6.62bn had been estimated).

There was even a bigger decline for iPad revenue, which fell 20 percent to $5.79bn ($6.41bn had been estimated).

The company’s wearables business (Apple Watch, AirPods etc) was up 2 percent at $8.28bn ($8.39bn had been estimated, while services revenue was up 8 percent at $21.21bn ($20.76bn had been estimated).

Apple is in a holding pattern at the moment, waiting to reap any reward from its recently unveiled Vision Pro headsets (available next year), as well as the bump from the September release of its next generation smartphone, the iPhone 15.