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Apple’s fourth-quarter earnings signals mixed concerns over China

ISO Republic | Freerange Stock

Apple Inc. reported fiscal fourth-quarter earnings on Nov. 2, beating analysts’ expectations on earnings and revenue but showcasing a deceleration in growth rate.

The Ticker previously reported that China banned iPhones among its government officials, signaling a move to limit Apple’s presence as Huawei’s flagship phone, the Mate 60 Pro+, continued to grow its market share in China. 

Investors and analysts looked at the quarterly report to gauge Apple’s growth internationally and in China to determine the company’s standing.

Apple’s fourth-quarter earnings showcase revenue down 1% year over year equating to $89.5 billion, a net income increase of 10.8% amounting to $22.96 billion, a 3% decline in net sales totaling $383.29 billion and a 2.5% decrease in sales from China. 

“Today Apple is pleased to report a September quarter revenue record for iPhone and an all-time revenue record in Services,” Tim Cook, CEO of Apple, said in the earnings report. “We now have the strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon-neutral Apple Watch models, a major milestone in our efforts to make all Apple products carbon neutral by 2030.”

Conditionally, Luca Maestri, Chief Financial Officer of Apple, noted that Apple saw strong performances in emerging markets and will continue expanding and working with partners in these markets to “offer a wide range of affordability programs so that we can best serve our customers.”

Despite revenue growth in emerging markets, iPhones and Apple services — App Store, iTunes, Apple Pay, Apple Music, iCloud and Apple Care — other Apple products such as the Mac, iPad, AirPods and Apple Watch all showed continuing declines in sales. 

Apple’s Mac saw a 34% fall in sales year over year, accompanied by a 10% and 3% decline in Wearables and iPad sales, respectively. 

Cook expressed to CNBC that the market for personal computers is challenging but cited the Oct. 30 announcement of the Mac M3 and other Apple products as reasons for a “significantly better quarter in the December quarter.”

Investors and analysts acknowledged the challenging macroeconomic environment. However, outlooks were mixed on the company’s continued decline in growth, revenue decline and relationship with China.

Angelo Zino, senior equities analyst at CFRA Research, explained that the research firm does not consider shared gain in the smartphone market in China but looks to see if Apple is growing in line with the market, concluding that Apple’s growth story isn’t “necessarily dead because they’ve got such low share in a ton of emerging regions out there.”

“Apple’s a great company and a great core franchise,” Toni Sacconaghi, a senior analyst at Bernstein, said in an episode of CNBC’s Squawk Box. “But what do you pay particularly at this point where Apple, you know, declined in revenues last year and we think probably will not grow much in revenues in 24; what do you pay for that relative to other large-cap tech choices?”

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