[Asia Economy Reporter Jeong Hyunjin] Apple, the iPhone manufacturer, smiled upon receiving strong results for the first quarter (January to March) of this year despite supply chain issues and rising inflation concerns. However, due to the impact of China's lockdown measures caused by COVID-19, sales are expected to decline, resulting in a potential loss of up to $8 billion (approximately 10.16 trillion KRW).
According to the Wall Street Journal (WSJ) and others on the 28th (local time), Apple announced that its fiscal second quarter (January to March) revenue was $97.28 billion, and net profit was $25 billion, representing increases of 9% and 6% respectively compared to the same period last year. Earnings per share were $1.52. Both figures significantly exceeded Wall Street's expectations. The market had forecasted Apple’s revenue for January to March to be $93.89 billion and earnings per share to be $1.43.
Foreign media reported that Apple’s results were the best for a first quarter and the third largest for any quarter overall. However, the growth rate was the lowest since the pandemic (global outbreak).
Looking at the details, iPhone sales increased by 5.5% year-on-year to $50.57 billion. The increase was attributed to more Android phone users switching to iPhones and the sales expansion contributed by the low-priced iPhone SE released in March. iPad sales fell by 1.9% to $7.65 billion, while Mac computer sales, including desktop and laptop PCs, rose by 14.7% to $10.44 billion.
Apple’s new growth engine, the Services segment, recorded revenue of $19.8 billion, up 17.3% year-on-year. The Services segment includes subscription services such as the App Store, Apple Music, Apple TV+, Apple News, and Apple Arcade (games). Apple is also reportedly considering launching hardware subscription services for iPhone, Mac, and other devices.
Apple’s strong performance came amid adverse conditions such as high inflation, supply chain disruptions, China’s COVID-19 lockdowns, and the Ukraine war. Apple CEO Tim Cook said, "Supply constraints have eased significantly compared to what we experienced in the fourth quarter of last year," and stated that China’s lockdown measures did not affect this quarter’s results.
However, Apple said that the impact of China’s COVID-19 lockdown measures would be reflected in the results for April to June. The estimated sales loss is expected to range from $4 billion to $8 billion. Apple CFO Luca Maestri said that the lockdown not only affects demand but also "supply constraints caused by COVID-19 related disruptions and industry-wide silicon shortages will impact our production capacity to meet consumer demand."
Following the earnings announcement, Apple’s stock price fell more than 2% in after-hours trading.
Meanwhile, Apple announced that its board approved a $90 billion share repurchase program on the same day. CNBC reported that Apple spent $88.3 billion on share buybacks last year. Apple also raised its dividend by 5% to $0.23 per share.
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