Apple Posts Record Third Quarter but Major Decline in Profits

Surmounting inflation and supply chain delays, Apple posted revenue of $83 billion, up 2 percent year-over-year and a record for the company’s third quarter. However, profit declined 11 percent to $19.4 billion, the worst performance since 2020. Sales of iPhones were strong, generating $40.7 billion in revenue for the quarter, a 2.8 percent increase over the same period in 2021. But wearables did not prove as resilient, with revenue down 8 percent to $8.1 billion. On the earnings call to discuss Apple’s fiscal 2022 third quarter ended June 25, CEO Tim Cook said the results were “better than we expected.”

“We set June quarter records in the Americas, in Europe, and in the rest of Asia Pacific region,” Cook said on the earnings call, adding that the three-month period also produced “revenue records in both developed and emerging markets with very strong double-digit growth in Brazil, Indonesia, and Vietnam and a near doubling of revenue in India.”

Cook also talked-up the iPhone 13 lineup, which he said customers have been “raving about” with respect to “camera quality, with features like cinematic mode and macro photography.” WSJ writes that iPhone sales “are Apple’s biggest driver of revenue,” and grew this quarter “while analysts had expected a 2.5 percent drop.”

This year marks the 15th anniversary of the iPhone, Cook pointed out in the call (transcribed by The Motley Fool). The iPhone 14 release, expected in September, has raised expectations for the outlook for the rest of the year, according to The Wall Street Journal, which reports “analysts are predicting iPhone profit for fiscal 2022, which ends in September, will be near $100 billion after a strong first half.”

While revenue from Mac computers declined in fiscal Q3, “it’s worth noting that Apple’s recently announced MacBook Air with M2 chip only started shipping this month, so the numbers for Macs are likely to increase next quarter,” writes Engadget. noting that “considering the devices the company is expected to launch in the fall, it’s also possible consumers are holding out for new products and waiting out the ongoing inflation.”

Apple CFO Luca Maestri told analysts that revenue from Mac sales totaled $7.4 for the quarter, “despite supply constraints.”

In addition to problems based on China’s zero tolerance COVID-19 lockdown, global inflation putting a crimp on customer spending, and overall inflation, Cook said the company’s quarterly challenges included “strong foreign exchange headwinds and the impact of our business in Russia” as a result of the war in Ukraine.

From Apple to Microsoft, Big Tech Results Spotlight Breadth of Economic Upheaval, The Wall Street Journal, 7/29/22

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