Apple escapes tech rout with a scratch; iPhone sales rise 9.7% year-over-year

Apple escapes tech rout with a scratch; iPhone sales rise 9.7% year-over-year
On a day that tech stocks were dumped by all types of investors (well, except for contrarians), Meta shares closed down nearly 25% to $97.94 to erase approximately $13.75 billion from CEO Mark Zuckerberg's net worth. In after-hours trading today, shares of Amazon are down almost $21 or 19% to $89.89 likely reducing CEO Jeff Bezos' bank account. Amazon gave guidance for the calendar fourth quarter that was less than expected.

Apple's iPhone revenue rose 9.7% year-over-year during the fiscal fourth quarter

And Apple just reported earnings for the fiscal fourth quarter. For this period, iPhone sales came in under expectations at $42.63 billion. Wall Street was looking for Apple to report handset sales of $43.21 billion. The figure was still up 9.67% on a year-over-year basis. In September, Apple released the iPhone 14, iPhone 14 Pro, and iPhone 14 Pro Max with the iPhone 14 Plus getting released during the first week of October.

For the fiscal year, Apple generated $205.5 billion in iPhone revenue compared to $192 billion during the previous year. That works out to a 7% hike from fiscal 2021 to fiscal 2022.

Sales of iPad tablets dropped 13.06% on an annual basis to $7.17 billion during the fiscal fourth quarter. Wall Street was expecting iPad sales of $7.94 billion. Over the last 12 months, sales of the device declined from $31.86 billion during fiscal year 2021 to $29.29 billion in fiscal 2022. That is an 8% decline year-over-year.

Services revenue, an important part of the Apple story, also failed to meet Wall Street estimates. Analysts predicted that Apple would report gross of $20.10 billion for the Services unit but the actual number was $19.19 billion, up 4.98% from last year. For all of fiscal 2022, Apple's Services revenue was $78.13 billion. That was up 14.2% year-over-year.

The Wearables, Home and Accessories unit, which includes the popular Apple Watch and the AirPods true wireless earbuds, saw revenue rise 9.8% to $9.65 billion from $8.79 billion last year. For the year, sales of this unit increased 7.5% to $41.24 billion compared to the $38.37 in sales generated last year.

During the fiscal fourth quarter of 2022, sales rose in every market except for Japan. That was the same result seen for the fiscal year.

Overall, revenue for the fiscal fourth quarter was $90.15 billion topping an estimate of $88.90 billion from Wall Street analysts and was up 8.1% on an annual basis. For the fiscal year, revenue was $394.33 billion, up from $365.82 billion the year before. Net income was $20.72 billion for the fiscal fourth quarter, up from the $20.55 billion it reported during the same quarter last year. For fiscal 2022, Apple had a profit of $99.80 billion. That was up 5.4% year-over-year.

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Diluted earnings per share of $1.29 topped estimates of $1.27 by two cents. The previous year, Apple had earnings of $1.24 during the fiscal fourth quarter. That works out to a 4% gain this year. For the full year, diluted earnings were $6.11, up 8.9% from the prior year's $5.61.

Apple's shares had dropped $4.55 to $144.80 during the tech rout on Thursday. That decline of 3.05% was followed by a 70 cent or .48% drop in after-hours trading to $144.10 after the report was issued.

CEO Tim Cook said, "This quarter's results reflect Apple's commitment to our customers, to the pursuit of innovation, and to leaving the world better than we found it. As we head into the holiday season with our most powerful lineup ever, we are leading with our values in every action we take and every decision we make. We are deeply committed to protecting the environment, to securing user privacy, to strengthening accessibility, and to creating products and services that can unlock humanity’s full creative potential."

Foreign exchange rates stopped Apple from reporting a double-digit gain in revenue

Cook said that Apple would have reported double-digit growth for the fiscal fourth quarters if foreign exchange issues did not impact Apple. The executive also said that Apple will slow the pace of hiring. "We are hiring deliberately. And so we’ve slowed the pace of hiring," Cook said.

Luca Maestri, Apple’s CFO, added "Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop. We continued to invest in our long-term growth plans, generated over $24 billion in operating cash flow and returned over $29
billion to our shareholders during the quarter."

He went on to say, "The strength of our ecosystem, unmatched customer loyalty, and record sales spurred our active installed base of devices to a new all-time high. This quarter capped another record-breaking year for Apple, with revenue growing over $28 billion and operating cash flow up $18 billion versus last year."

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