Apple has announced a sales forecast that indicates a continued slump in the coming quarter, resulting in a drop in shares. Despite exceeding Wall Street’s sales and profit expectations in the fiscal third quarter, the weaker-than-expected sales of the iPhone disappointed investors. The company did not provide specific details on how much they expect iPhone sales to improve in the fourth quarter.
Apple finds itself in a challenging position as it competes with Android rivals in the mature smartphone market with its flagship iPhone. While the company has recently unveiled its next big product, the Vision Pro mixed-reality headset, it has not yet reached consumers.
In the fiscal third quarter that ended on July 1, Apple reported a 1.4% decline in sales to $81.8 billion, with earnings per share rising by 5% to $1.26. These results surpassed analyst expectations. Weaker iPhone sales were offset by strong performance in the services segment, which includes Apple TV+ and by sales growth of 8% in China.
Despite beating estimates, Apple’s shares dropped approximately 2% after the sales forecast was announced. The company expects its fiscal fourth quarter revenue performance to be similar to the third quarter’s decline. However, this forecast fell below analyst expectations of roughly flat sales for the fourth quarter.
Concerns surrounding Apple’s volume growth and the future of iPhone sales have been raised by industry experts. Apple’s push into generative artificial intelligence has contributed to increased research and development spending, which reached $22.61 billion for the fiscal year so far, approximately $3.12 billion higher than the previous year.
In terms of market performance, Apple appears to be outperforming its competitors in China, despite the overall decline in smartphone sales in the country. The company reported double-digit growth in iPhone sales and high performance in other segments within China.
Apple’s services segment, including Apple TV+ and third-party apps, generated $21.21 billion in revenue, surpassing analyst estimates. The wearable business, which includes the Apple Watch and AirPods, had revenue of $8.28 billion. Mac and iPad sales also exceeded expectations.
As Apple moves forward, investors will closely watch for any potential announcements related to the Vision Pro mixed-reality headset and advancements in generative artificial intelligence. The company faces challenges in a market with limited smartphone growth, and the success of its future product offerings will shape its business model.
