Profits for Apple and its neighbors exceed expectations

Between massive social plans and cutting-edge products, the tech giants rebounded during the first quarter of 2023, with revenues and profits exceeding market expectations, despite the global economic slowdown.

Apple, which published its quarterly results on Thursday, substantially exceeded analysts’ predictions with nearly $95 billion in sales for the period from January to March, of which the Californian group posted $24 billion in net profit.

Sales of its flagship iPhone, up slightly year-on-year to $51.33 billion, also beat forecasts as demand for electronic devices fell sharply due to inflation.

Its services business (music, entertainment, online storage, payments, etc.) also grew slightly year-on-year, to nearly $21 billion for the second quarter of its staggered fiscal year.

“We are pleased to have achieved an all-time record in services and a record for the second quarter for the iPhone (…) Our base of active devices is at its highest”, welcomed Tim Cook, the boss of Apple, quoted in the press release.

“We have record revenues across the entire App Store (its mobile app store, editor’s note)”, he added during the conference call with analysts, also mentioning “more than 975 million paid subscriptions” subscribed to services of the apple brand.

“Apple has scored a lot of points in the past quarter,” reacted Dan Ives of Wedbush Securities. The analyst noted the progress of the iPhone which shows that the company “continues to gain market share in China despite the poor economic situation”.

– Mac down –

The Cupertino (Silicon Valley) group’s revenues and net profit fell slightly over one year, but the market expected worse.

Because the demand for electronic devices, which had exploded during the pandemic and its confinements, has fallen in recent months in the face of inflation.

In the second half of 2022, sales of mobile phones worldwide fell to their lowest level since 2014, according to Canalys.

But “the popularity of the professional range of iPhones is helping Apple to expand its market share, despite the constraints on demand,” said Canalys analyst Le Xuan Chiew at the end of January.

“And unexpected difficulties on the supply side for these models have led Apple to accelerate its diversification to mitigate the impact of this issue,” he added.

Apple last month launched a savings account with high interest rates (4.15% per year, compared to 0.37% on average in the United States) for holders of the Apple Card, the card it has to market in 2019. Some $990 million was deposited into these accounts in the first four days, according to Forbes.

Personal computer sales also slumped at the start of the year, and Apple Macs were not spared: they generated $7.2 billion in revenue in the past quarter, compared to $10.4 billion. at the same time last year.

– Paid redundancies –

Last week, Alphabet (Google), Microsoft, Meta (Facebook, Instagram, WhatsApp) and Amazon also reassured the markets with better than expected quarterly results even though their growth has slowed.

Despite advertiser budget cuts, revenues for the two world leaders in digital advertising, Google and Meta, rose slightly year on year, to nearly $70 billion and $29 billion, respectively.

Their massive social plans were particularly appreciated by investors, like that of Amazon, which decided to cut 27,000 jobs in total.

The e-commerce and cloud giant’s revenue topped $127 billion, $3 billion more than expected.

And Microsoft has delighted Wall Street with cloud-boosted revenue. The IT group also enjoys the ascendancy it has taken in artificial intelligence with the integration into its services of advanced tools developed with OpenAI, the start-up which launched the ChatGPT phenomenon.

“The macro environment isn’t flamboyant but tech has come out of it better than all the pessimists were predicting,” noted Wedbush’s Dan Ives last week. “With cost reductions, and huge market capitalizations as a safety net, the sector can be expected to navigate the storm more easily than others.”