2024-10-31 22:59:00
The rebound in iPhone sales partly offsets the sharp drop in net profit caused by the €13 billion to be repaid to Ireland.
Apple posted slightly better-than-expected quarterly results on Thursday, thanks largely to a rebound in iPhone sales, but Wall Street wasn’t thrilled with the company’s talk on artificial intelligence. Net income for the quarter (July to September) was $14.7 billion.
Down sharply (-36%) on one year due to the consequences of a conviction in Europe for illegal state aid, according to a press release for the fourth quarter (July to September) of the shifted financial year. According to the consensus established by FactSet, per share and excluding exceptional items, it reached $1.64, better than what analysts had expected ($1.60).
Two consecutive quarters of decline
To satisfy the demands of Wall Street, the Cupertino (California) company was able to count on its flagship product, the iPhone, whose sales increased by 5.5% in a year. Apple thus interrupts two consecutive quarters of decline in revenues of its flagship smartphone. “Apple’s results show its resilience in the face of headwinds, with iPhone demand improving in China, where sales of high-end models exceeded expectations”commented Jacob Bourne, analyst at Emarketer.
Another bright spot is the services business, which includes the App Store app store, music (iMusic) and video (Apple TV+) streaming platforms, the Apple Pay payment service, as well as remote storage of data (iCloud). Services saw growth of 12%, significantly higher than all other divisions in the group, and now account for more than a quarter of Apple’s revenues (26%). In total, fourth-quarter sales were $94.9 billion, up 6% year-over-year.
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Interview between the Time.news Editor and Technology Expert
Editor: Good evening and welcome to Time.news. Today, we’re diving into the latest quarterly results from Apple, which seem to have mixed reviews from Wall Street. With us is Dr. Sarah Thompson, a seasoned technology analyst with a focus on consumer electronics. Thank you for joining us, Sarah.
Dr. Thompson: Thank you for having me! It’s always a pleasure to discuss the latest trends in tech, particularly with a giant like Apple.
Editor: To start, Apple posted a net income of $14.7 billion this past quarter, which sounds impressive on its face. However, they experienced a significant 36% drop in net profit compared to last year due to the €13 billion they owe to Ireland. Could you explain the impact of this ruling and how it affects Apple’s financials?
Dr. Thompson: Absolutely. The €13 billion is a result of a European Commission ruling that found Apple guilty of receiving illegal state aid from Ireland. This has not only forced Apple to pay back a significant amount but it also affects their profit margins and overall financial health. It’s a sharp reminder of the scrutiny big tech companies are under in Europe, which could set a precedent for similar cases in the future.
Editor: That’s a crucial point. Despite the net loss, the rebound in iPhone sales has seemingly helped offset some of those losses. What do you think drove this resurgence in iPhone sales?
Dr. Thompson: There are several factors at play. Firstly, Apple’s pricing strategy for the new models has attracted both existing customers and new users, especially with the introduction of features that enhance user experience. Additionally, there’s the brand loyalty factor—Apple’s ecosystem keeps users coming back. The timing of product releases also coincided with seasonal demand, particularly as consumers gear up for the holiday season.
Editor: Interesting! However, Wall Street seems to have reacted coolly to Apple’s discussions on artificial intelligence. What are your thoughts on this hesitation?
Dr. Thompson: Well, AI is a double-edged sword in the tech industry. While many companies are pushing aggressively into AI, Apple has traditionally been more cautious. Their emphasis on privacy and data security means they might not jump on every trend. Investors may worry that this could potentially hinder Apple’s competitiveness in areas like machine learning and AI-driven services, which are increasingly important in the market.
Editor: That makes sense. It appears that Apple is at a crossroads, balancing its legacy of strong product sales against pressure to innovate. What do you believe is the company’s next move?
Dr. Thompson: Apple will likely continue to focus on enhancing its existing product lines while gradually integrating more AI features to align with consumer expectations. Their investment in services like Apple Music and iCloud also shows they are diversifying beyond hardware. It’s a game of maintaining their loyal customer base while appealing to new demographics—an ongoing challenge that will define their strategy moving forward.
Editor: Those are insightful predictions. Before we wrap up, do you have any final thoughts on Apple’s position in the market and the upcoming year?
Dr. Thompson: Apple’s foundation is strong, but navigating the regulatory landscape and staying innovative will be critical. As they look to integrate AI thoughtfully without compromising user trust, I believe it will be fascinating to see how they balance these elements. The company’s ability to adapt to changing market dynamics will ultimately determine its continued success.
Editor: Thanks, Sarah, for shedding light on these complex issues. It’s clear Apple’s future will be one to watch closely as it manages challenges and opportunities alike. Thank you for joining us today!
Dr. Thompson: Thank you for having me! It’s always great to discuss the ever-evolving landscape of technology.