Shares of Apple (AAPL) ended slightly positive on Friday, despite the company reporting third-quarter earnings on Thursday that iPhone sales were down compared to the same period a year ago.
Wall Street has been closely watching Apple’s performance in China, one of its most important markets, where the company has struggled to reclaim market share from domestic rivals, including Huawei, but performance there has fallen short of expectations.
Apple said its revenue from greater China reached $14.7 billion. Analysts surveyed by Bloomberg had expected revenue of $15.2 billion. Apple reported $15.7 billion in sales in China in the same quarter last year. Overall iPhone sales came in at $39.2 billion compared to the $38.9 billion expected, falling short of the $39.6 billion Apple is forecast to achieve in the third quarter of 2023.
Despite the shortfall, Apple CFO Luca Maestri told Yahoo Finance’s Josh Lipton that the company is seeing overall improvement in sales in the region. Maestri further noted that the country is seeing record upgrades and that sales are stronger than in the first half of the year.
Apple earned $1.40 per share for the quarter on revenue of $85.5 billion. Analysts were expecting EPS of $1.35 on revenue of $84.4 billion, according to estimates compiled by Bloomberg. Apple posted EPS of $1.26 on revenue of $81.7 billion in the year-ago quarter.
Despite a tough start to the year, Apple’s shares are up about 18.6% since the beginning of the year, helped by the company’s unveiling of its “Apple Intelligence” software at its Worldwide Developers Conference in May.
Apple CEO Tim Cook speaks at the start of the Apple Worldwide Developers Conference. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)
Services revenue reached $24.2 billion. Wall Street had expected $23.9 billion in services revenue. Apple’s iPad revenue topped $7.1 billion, beating analysts’ expectations of $6.6 billion, thanks to the success of the company’s new iPad Pro line.
Mac sales reached $7 billion, up from $6.8 billion for the division last year, but wearables sales fell to $8 billion from the $8.2 billion Apple reported last year.
Apple is also preparing to release its long-awaited Apple Intelligence software later this fall. Powered by Apple’s generative AI technology, the software is expected to arrive on iPhones, iPads, and Macs sometime in October, according to Bloomberg’s Mark Gurman.
Analysts are divided on the potential impact of Apple Intelligence on iPhone sales over the next 12 months, with some saying the software will spark a new iPhone sales supercycle and others expressing pessimism about the technology’s impact on Apple’s bottom line.
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It’s important to note that Apple Intelligence is only compatible with iPhone 15 Pro and newer smartphones, so users who are desperate to get their hands on the technology are all but guaranteed to be able to upgrade to a new, more powerful phone as soon as it becomes available.
Either way, for Apple Intelligence to be a hit, Apple will need to make sure that the product has features that make customers interested and want to use it right away.
Contact Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter. Daniel Howley.
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