Apple Set to Report Weaker Sales for Second Straight Quarter

This would be only the third time in a decade that the iPhone maker has posted back-to-back quarters of falling revenue. The Cupertino, Calif.-based company is hoping to exit from a difficult holiday season hampered by supply-chain disruptions and flagging consumer interest in its Mac computers and wearable devices.

IPhone sales are expected to decline about 4% to $48.7 billion. However, analysts project that consumer demand continues to gravitate toward the company’s most-expensive phone, the iPhone 14 Pro Max, accounting for 24% of all iPhone sales, according to Consumer Intelligence Research Partners. The iPhone 14 Pro followed closely behind with 22% of all sales for the quarter, the research firm found.

Premium iPhone Pro sales are crucial to Apple’s strategy in recent years of driving revenue growth while shipment growth has slowed. Demand for Pro models has helped elevate the average selling price of the iPhone to $988 in the March quarter from $802 in the 2019 March quarter, according to Consumer Intelligence Research Partners.

Apple is the last of the major Western technology companies to report earnings. Last week, investors warmly greeted modest results from most of the company’s peers, reflecting renewed market interest in big tech firms.

Facebook’s

Meta Platforms showed signs of improvement in digital advertising. Google-owner

Alphabet

reported a drop in ad sales, while

Microsoft

saw cooling corporate demand for its cloud services. Shares rose sharply for all three companies as they exceeded analyst forecasts.

Apple has largely been able to avoid some of the larger macroeconomic uncertainty coming out of the pandemic that hit its big tech rivals.

“Apple has become a significant bellwether for what’s going on in the economy, both domestically and globally,” said Trip Miller, managing partner at Apple investor Gullane Capital Partners. “My sense is that things have slowed down globally.”

In Apple’s December quarter, the company struggled to keep up with demand for its iPhone 14 Pro models as its supply chain in China was hit by disruptions. Revenue fell 5% year-over-year for the period, its first decline in nearly four years. Analysts expected much of that unfulfilled demand for the latest premium iPhones to have shifted to the March quarter.

Last month, Apple opened its first retail store in India, which could help accelerate new iPhone demand for the year, analysts said. The company is also looking to India as a potential major location for further diversifying its supply chain away from China. Apple’s main manufacturing partner,

Foxconn Technology Group,

is also considering a major expansion into India, The Wall Street Journal recently reported.

For the March quarter, Apple’s services business is expected to have encountered a weaker digital advertising market and less spending on mobile videogaming. The segment is projected to grow 5.8%, slightly slower than the December quarter’s pace.

Next month, Apple will host its annual developer conference, where it is expected to announce new software for its devices, including a potential journaling app for users to keep track of their daily lives, the Journal recently reported. More important, the company is poised to unveil its first new major product in nearly a decade: a headset that merges virtual and augmented reality into one device. The product isn’t expected to be a major financial contributor in the near future, analysts said.

Write to Aaron Tilley at [email protected]