In a year that will be remembered as a horror show for many tech companies, Apple has so far managed to weather the storm with record earnings in the third quarter. Lower than expected iPhone sales however, suggest there may be holes in the ship in need of patching.
The Silicon Valley giant posted its September quarterly earnings on Thursday which saw them bring in a record $90.1 billion in quarterly revenues, up 8% from the same time last year. Apple’s net income, $20.7 billion, similarly broke its quarterly record.
While all that might sound great there’s some potentially worrying signs around the iPhone, Apple’s main cash cow. This quarter, the company’s iPhone sales increased by 9.7% to $42.6 billion. That’s slightly less than the $43 billion analyst expected according to The Wall Street Journal. Those figures come one month after a Bloomberg report claimed Apple was moving away from previous plans to increase production of its new iPhone 14 models, allegedly due to lagging demand.
At the same time though, Apple reported record quarters in various other segments, notably including record results for its Mac computers. Apple refused to provide any revenue guidance or expectations for the entire year, but said they expected revenue growth to accelerate in the next quarter.
CEO Tim Cook spoke confidently of the company’s overall earnings, which managed to break records despite, “a range of challenges facing the world,” from the war in Ukraine, persistent pandemic disruptions, a wobbly economy, and climate change. Cook went on to say silicon-related supply constraints, something that’s plagued many tech companies in recent years, were “not significant.”
That financial storm cloud actually started gathering when Snap recently posted its worst year-over-year revenue growth in 11 years driven primarily by a sluggish digital advertising environment. That dire forecast continued over this week as Google-owned Alphabet reported its second worst quarter of growth since 2013. Worse still, the company’s revenues growth trickled down to just 6% compared to 41% the previous year. Like Snap, Google attributed much of its struggles to declining digital ad spending.
Possibly the single greatest blunder of all from Meta, which posted a revenues decline for the second quarter in a row, a blunder that, until recently, would have been unheard of for Silicon Valley’s once undisputed growth machine. The company’s $27.7 billion revenues were down 4% from the same time last year. That poor performance sent the company’s stock plummeting leaving the company with a market valuation under $300 billion for the first time since early 2016, according to The Wall Street Journal. In their earrings call, CEO Mark Zuckerberg warned of even more bleak earnings in the months to come citing “significant changes across the board to operate more efficiently.”
Meta’s results were so rough they even forced television commentator and professional screamer Jim Cramer to unsuccessfully fight back tears on live television for encouraging viewers to purchase Meta’s stock. Over and over again, Cramer admitted he placed too much faith in Meta’s management team. “I screwed up,” Cramer said.