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Apple announces higher iPhone sales but cautious holiday outlook

MONews
5 Min Read

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Apple gave cautious guidance for the important holiday quarter on a call with investors due to uncertainty about how the launch of new AI features will translate to sales of iPhones and other devices. Because otherwise, solid quarterly results will be complicated.

The forecast for mid-single-digit revenue growth this quarter was slightly below Wall Street expectations. Shares fell 1.9% in after-hours trading Thursday.

Ahead of the call, consensus expected revenue for the quarter to reach about $128 billion, an increase of about 7% from a year earlier and the high end of the restrictive guidance Apple gave on Thursday. The company does not provide exact guidance figures.

The report on the world’s most valuable public companies comes in a week of mixed earnings for the tech giants. Google and Amazon beat expectations, but Microsoft and Meta underwhelmed, dragging U.S. stocks broadly lower on Thursday.

While Apple reported strong sales growth in its Hardware and Services businesses, sales in China were flat compared to a year ago.

Analysts also got their first glimpse at how sales of the iPhone 16 with ‘Apple Intelligence’ features will fare.

Sales for the quarter ending Sept. 28 were $94.9 billion, up 6% from a year ago and just above the consensus estimate of $94.4 billion.

Diluted earnings per share were $0.97 after the company took a one-time charge of $10.2 billion related to an EU tax ruling earlier this year. Net income was $14.7 billion, compared with $24.3 billion expected by analysts, excluding expenses.

Total iPhone sales were $46.2 billion, up from $43.8 billion the previous year. China sales were about $15 billion year-over-year, an improvement from declines in the previous two quarters of 2024.

In a call with investors, Apple CEO Tim Cook cited improved exchange rates, solid smartphone sales, and expansion of the user base as factors for improving performance in China.

The company’s services business, which includes the App Store and Apple Pay, grew about 12% year over year to $24.9 billion.

On Monday, Apple began rolling out AI features through software updates for iPhone, iPad, and Mac. Initially available only in US English and only on iPhone 15 and 16 smartphones, the first Apple Intelligence tools included an improved Siri voice assistant, handwriting tools, and AI-powered photo editing tools.

Luca Maestri, Apple’s Chief Financial Officer, said in an interview with the Financial Times that sales of the iPhone 16, the latest model of the flagship smartphone released on September 20, will exceed the sales of the iPhone 15 in the first eight days of sales in 2023. “It was higher than that,” he said.

Maestri said customers have demonstrated receptivity to new generative AI capabilities, downloading the AI-focused operating system this week at twice the rate of last year’s software updates.

More AI features are expected to launch before the end of the year, including Siri’s integration with ChatGPT and AI-based emoji and image creation.

Analysts have questioned whether AI-driven revenue growth will come on time this quarter. Cook and Maestri declined to elaborate further on the impact Apple Intelligence is expected to have on holiday sales upon launch.

Maestri will step down from his position as chief financial officer (CFO) in early 2025, and Kevan Parekh, Apple’s vice president of financial planning and analysis, will take over the role.

Cook also declined to comment on the upcoming U.S. presidential election. Apple’s supply chain is closely tied to Chinese manufacturers, and former President Donald Trump has pledged to impose new tariffs on imports if he wins a second term.

“I don’t want to speculate on those types of things,” Cook said.

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