There are many challenges for Apple. In recent months, the company has been sued by the Justice Department, fined by European regulators and challenged by a resurgent Chinese smartphone competitor.
On Thursday, the company added to its list of problems, reporting that business is in decline.
Apple announces revenue has decreased by 4 In the three months to March, it was $90.8 billion. Revenue from wearable products such as the iPhone, iPad and Apple Watch decreased from the same period last year, but revenue from software and services increased. Profits fell 2% to $23.64 billion, Apple's first quarterly profit decline in a year.
The biggest concern about Apple's struggles is that sales in China, the world's second-largest smartphone market, have fallen 8%. The iPhone's popularity in the country has waned since Huawei, which the Trump administration restricted from partnering with U.S. technology companies, unveiled new smartphones with 5G capabilities last year. Apple's share of smartphones sold in China fell by 4% last quarter, according to technology research firm Counterpoint.
Apple shares rose 3.5% as quarterly sales and profits slightly beat Wall Street expectations and performed better in China than feared. The company said it plans to buy back $110 billion of stock and that sales are on the rise this quarter.
This was in contrast to the strong performance of other major tech companies. In the past two weeks, Amazon reported a tripling of its quarterly profit, Microsoft saw its quarterly revenue from cloud computing rise by a third, and Google's parent company Alphabet announced it would pay its first dividend. did.
These companies' sales accelerated in part because of their investments in generative artificial intelligence. This technology can be used to write essays and software code, but Apple has not yet integrated it into its products. Investors are hoping the situation will change in June, when Apple holds its annual developer conference and announces its latest software.
“This is a bellwether stock that's going through a volatile period,” said Scott Acecheck, chief operating officer of exchange-traded funds (ETFs) Rex Shares. “Apple needs a win to change this narrative, and being able to deliver some of its AI across its devices could make it happen. The question is what path they take going forward. I mean.”
Apple's business continues to be driven by its successful sales of apps and services to customers. The company has 2.2 billion devices in use around the world and has sold more than 1 billion subscriptions to everything from dating apps like Tinder to its own services like Apple Music. Software and services revenue increased 14% last quarter to $23.9 billion, the company said.
But one of the company's largest services businesses, the App Store, has been challenged by regulators around the world. The Store is the only way to distribute apps on the iPhone, and Apple collects a 30 percent commission on every app sold.
The European Commission on March 4 fined Apple 1.8 billion euros ($1.95 billion) for interfering with competition by preventing music streaming rivals from offering promotions and subscription upgrades to users. was punished. The commission is also investigating whether Apple may violate new competition laws that require it to allow competing app stores and alternative payment systems.
Next week, a federal judge is scheduled to hold a hearing to determine whether Apple is invalidating a 2021 court order allowing alternative payment methods for services within apps. Apple said developers can also use other payment systems, but they will have to pay a 27% fee. Companies such as Epic Games said the fees violate court rulings.
Analysts do not expect the regulatory challenges to have a negative impact on Apple's business. But they hinder the company's efforts to focus customers' attention on its devices.
Apple began selling the Vision Pro augmented reality headset in January. The device, which costs $3,500, contributed only a small amount to the company's sales during the same period, analysts said. It is not expected that large quantities will be purchased for at least four years.
