Stock Slides As Disappointing iPhone Sales Lead Profits To Slip

Topline

Apple disappointed in its quarterly earnings report released Thursday afternoon, sending its stock sliding, as the world’s largest company becomes the latest Silicon Valley behemoth to step to the plate during the crucial earnings season.

Apple CEO Tim Cook prayed for a post-earnings stock swing akin to Meta’s.

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Key Facts

Apple raked in $117.2 billion in revenue in the three-month period ending December 25, its first year-over-year decline since 2019 and a 5% decrease from the same timeframe last year, and tallied $30 billion in profit in the period, or $1.88 per share, an 11% decline.

That falls well short consensus analyst estimates of $121.4 billion in sales and $1.94 earnings per share, according to FactSet.

Apple brought in $20.8 billion from services, such as iCloud and AppleTV+, and $96.4 billion from products during the quarter, with iPhones accounting for a majority of product revenues following the iPhone 14 launch.

The company reported $65.8 billion in iPhone sales in the quarter, an 8% decrease from the same period a year prior and short of analyst expectations.

Shares of Apple slipped about 4% in after hours trading.

Big Number

$2.4 trillion. That was Apple’s market capitalization at Thursday’s market close, by far the largest of any public company. Apple lost nearly $100 billion in market cap based in after hours trading.

Key Background

Apple stock suffered through its worst year since 2008 last year as the global economy weakened, declining 27%, outperforming the tech-heavy Nasdaq but far underperforming the Dow Jones Industrial Average and the S&P 500. Profits for the Cupertino, California-based company grew by 5.4% in the 12 months ending in September 2022, compared to 65% growth in the prior 12-month period. Much of the slowdown came as demand for the iPhone 14 fell short of investor hopes, while Covid-related production issues in China weighed on supply. Apple stock could be a “tale of two halves in 2023,” Bank of America analyst Wamsi Mohan wrote in a note to clients previewing earnings, predicting shares could rally on the back of “new product momentum” as the company reportedly angles to launch a mixed reality headset later this year.

Surprising Fact

Apple slashed its compensation package for its CEO Tim Cook by more than 40% this year, cutting his target pay to $49 million, with $9 million in salary and bonuses and $40 million in stock awards. Cook is worth $1.8 billion, according to Forbes’ latest estimates.

Tangent

Fellow tech giants Alphabet and Amazon also reported earnings after the bell Thursday. Shares of the Google parent and the commerce giant sank after each company posted lagging quarterly profits. Facebook parent Meta notched its second-best daily stock gain ever Wednesday after divulging its own quarterly financial results, making its CEO Mark Zuckerberg $12 billion richer.