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After a year of rapid growth in sales, Apple has demonstrated that it has a more resilient business than many of its tech peers, albeit slowing in the first three months of the year.
The company reported on Thursday that its profits rose 6 percent to $25 billion. slowdown in the second fiscal quarter from double-digit growth in each of the previous five quarters. While iPad and Mac purchases due to the pandemic slowed compared to the previous year, sales rose 9 percent to $ 97.29 billion, beating analysts’ expectations.
Tim Cook, Apple’s CEO, has warned investors about the coming months, telling Wall Street analysts that an accelerating Covid outbreak in China will reduce demand and disrupt production of iPhones, iPads and Macs. He said supply chain issues are expected to slash sales from $4 billion to $8 billion in the current quarter.
“I think we’re doing a reasonable job of navigating a challenging environment right now,” Mr. Cook said, noting that “almost all” of the factories Apple relies on in the Shanghai region have resumed production.
Shares of the company fell nearly 4 percent in after-hours trading, giving up most of Apple’s gains earlier in the day.
This The results add to a week of erratic financial reports from leading tech companies struggling to sustain explosive growth last year. Google’s parent company Alphabet and Facebook’s parent company Meta, reported profit reductions a year ago, by the way Microsoft has increased in profit.
The pandemic has been a double-edged sword for Apple. Analysts said the remote school and work environment has increased demand for computing equipment, and government incentive controls and cuts in travel and entertainment spending have given the company a jolt to its crucial iPhone business. But the same forces have caused supply chain problems and triggered a global chip shortage that cost Apple billions in missed sales.
In addition to highlighting the challenges it faces in China, Apple said that its decision to halt product sales in Russia due to its invasion of Ukraine will reduce overall revenue for the current quarter. Analysts estimate that Apple relies on Russia for 1 percent of its sales and a slightly larger percentage of its profits.
Apple said that in the January-March quarter, sales of iPhone, iPad and other devices rose 6.6 percent to $77.5 billion.
Gene Munster, a longtime Apple analyst and managing partner at venture capital firm Loup Ventures, said the bigger problem for Apple could arise in the coming months as the economic hardships of the war in Ukraine spread across Europe. “People are on their toes,” he said. “They pay more for fuel. If you live in Germany, will this affect your next iPhone purchase decision?”
Mr. Cook has turned to a growing array of software and services in Apple products worldwide to diversify beyond device sales. In the past year, people isolated at home splurge on apps like HBO Max, video games, and subscriptions. But Apple said in the midst of a return to work and school, sales growth in its services business was slowing, recording $19.82 billion. revenue during the quarter.
The company told shareholders it would increase its cash dividend by 5 percent and increase share buybacks by $90 billion.
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