Apple reported a 4% decrease in earnings for the first quarter of 2024 but managed to exceed predictions from analysts, who had forecasted a steeper slump. This was primarily due to the ongoing reduction in sales from the Chinese market. The tech giant confirmed revenues totalling £66.88 billion, a notch above the projected £66.57 billion. In addition, Apple revealed a share buy-back worth an impressive £80.82 billion and hiked its quarterly dividend by 4%.
The company’s diluted earnings for each share was $1.53, slightly ahead of the anticipated $1.50 but short of last year’s $1.52. Notably, the company’s service revenues, which consist of Apple TV, the App Store, and Apple Pay, soared by 14%, hitting a new peak at £17.52 billion.
Apple’s shares increased by 3% in after-market trading, despite seeing a 7% decrease in stock value since the start of the year and relinquishing their place as the world’s most valuable listed company to Microsoft.
Apple has had a difficult start to the year, marked by the abandonment of their long-term automotive project, intensified scrutiny from antitrust officials in the EU and the US, and dwindling iPhone sales in China.
Net sales for the quarter in the wider China region stood at £11.99 billion, a significant decline from last year’s £13.12 billion. Apple’s business in China could be facing a downturn, as last month’s Counterpoint Research report showed a 19% decrease in iPhone sales year on year for the same period, while a report by International Data Corporation established that the firm had fallen behind Samsung in the global smartphone market due to competition from Chinese rivals like Xiaomi and Huawei.
Despite the challenging market conditions in China, Apple CFO Luca Maestri emphasized that iPhone sales in the region remained robust, maintaining that Apple’s active devices were at an all-time peak. Commenting on the hefty share buyback, Mr. Maestri expressed high confidence in the company’s future and hinted at an upcoming period packed with new product launches.
Apple has faced considerable regulatory scrutiny from authorities in Europe and the United States. The American Department of Justice initiated an antitrust case against the tech behemoth in March.
In the same timeframe, the European Union launched a probe into Apple’s possible breach of the Digital Markets Act. The company was also ordered to pay a hefty fine of €1.8 billion by the EU for the regulations it imposes on competitor music streaming services via its App Store.
Market experts remain optimistic about Apple’s potential to increase its smartphone and laptop sales by unveiling eagerly awaited generative artificial intelligence features, potentially during its developers’ conference in June. Tim Cook, the CEO, has pledged to disclose more about the firm’s endeavours in the AI realm later in the year.
As stated by Mr Maestri, “We’re tremendously positive about our prospects in generative AI.” – Copyright The Financial Times Limited 2024.