((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Stephen Nellis, Max A. Cherney and Yuvraj Malik
Apple AAPL.O reported a smaller-than-expected drop in quarterly revenue on Thursday, and Chief Executive Tim Cook told Reuters the company expected a return to sales growth in the quarter in course thanks to its investments in artificial intelligence functions which will be unveiled in the coming months.
Apple said fiscal second-quarter revenue fell 4% to $90.8 billion, beating analysts’ average estimate of $90.01 billion, according to LSEG data.
For the current quarter, which ends in June, Cook told Reuters the iPhone maker expects “single-digit growth” in overall revenue. Wall Street expects revenue growth of 1.33% to $82.89 billion, according to LSEG data.
Apple faces a series of challenges across its business. Rivals in the smartphone space, such as Samsung Electronics 005930.KS, have launched competing devices intended to host artificial intelligence chatbots.
On the regulatory front, Apple’s services business, which includes the lucrative App Store and was one of the few areas of growth during the fiscal second quarter, is under pressure from a new law in Europe. In the United States, the Department of Justice in March accused Apple of monopolizing the smartphone market () and driving up prices.
For the fiscal second quarter, iPhone sales fell 10.5% to $45.96 billion, compared to analysts’ expectations of $46 billion. Apple executives said in February that the second quarter of the previous fiscal year benefited from a $5 billion increase in iPhone sales as the company made up for a supply chain lag during closures due to the pandemic.
If we exclude this one-off phenomenon, iPhone sales have only fallen slightly, with the Cupertino (California) company’s flagship product facing stiff competition. In China, Huawei Technology HWT.UL has gained market share.
Mr Cook said iPhone sales still saw “growth in some markets, including China”
But Apple’s revenue decline in China was not as big as analysts expected, with Greater China sales of $16.37 billion for the fiscal second quarter that ended on March 30, a drop of 8.1% and an increase compared to analysts’ expectations of $15.59 billion, according to data from Visible Alpha.
Apple has said little about its plans for artificial intelligence, the technology that rivals Microsoft
MSFT.O and Alphabet’s GOOGL.O Google are betting big. The company began increasing its research and development spending last year, and Cook said the company has spent more than $100 billion on R&D over the past five years.
“We continue to be very optimistic about the opportunity that generative AI presents to us and we are making significant investments,” he said. “We’re looking forward to sharing some really cool things with our customers” at events later this year, Cook said.
Apple’s quarterly earnings per share were $1.53, higher than Wall Street estimates of $1.50, according to LSEG data.
Revenue from Apple’s services segment, which also accounts for Apple Music and TV offerings, rose to $23.87 billion, above analysts’ expectations of $23.27 billion. dollars, according to LSEG data.
Analysts expected Mac sales to decline in the fiscal second quarter, but they instead rose to $7.5 billion, compared to estimates of $6.86 billion, according to LSEG data .
“Sales were driven by the power of the new MacBook Air, which features the M3 chip,” Cook said. “About half of MacBook Air buyers in the quarter were new Mac users
The company’s sales in the iPad segment fell to $5.56 billion, below analysts’ expectations of $5.91 billion.
In the wearable segment, which accounts for sales of Apple Watches and AirPods headphones, sales fell to $7.91 billion, compared to $8.08 billion forecast by analysts, according to LSEG data .
Apple also increased its cash dividend by 4% and authorized an additional $110 billion share buyback program.
