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Apple may Report Its First Decline in Quarterly Revenue in Nearly 4 Years, Say Analysts

Apple is expected to report its first decline in quarterly revenue in nearly four years after strict COVID-19 curbs in China rapped the economy and related protests upended iPhone production at its biggest supplier Foxconn.

Investors will look for details on how Chief Executive Tim Cook is trying to bolster demand in a weak economy that has prompted mass layoffs in the tech industry, a move Apple has so far avoided thanks to frugal hiring during the pandemic.

“With supply chain challenges largely normalized, we now believe Apple is entering a period of slower demand due to macro factors,” said Cowen analyst Krish Sankar, adding that he expects 2 percent fewer iPhone units to be sold in 2023.

The world’s biggest public company is expected to report on Thursday that iPhone sales fell about 5 percent for the all-important holiday quarter, according to Refinitiv. The last time iPhone sales slipped was in the August-October period in 2020, months into the COVID-19 pandemic.

UBS analysts expect iPhone sales to have held up better in the United States than China and Europe, as the economies reeled from the impact of COVID-19 and the Russia-Ukraine war.

Some demand for the iPhone will likely be pushed into the current quarter after supply restrictions in the first quarter and some demand lost due to lack of product availability in the holiday period, BofA analyst Wamsi Mohan said.

The services business, a key growth engine for the company and home to Apple’s music and video streaming services, is set to post its lowest revenue growth for the holiday quarter — another fallout of consumers limiting spending.


The disruption at the world’s biggest iPhone plant in Zhengzhou, China triggered a rare warning from Apple in November and limited stocks of its higher-end iPhone 14 models during what is typically its biggest sales quarter, powered by product launches and the holidays.

Greater China, including Hong Kong, is key to Apple’s fortunes, contributing roughly a fifth to annual revenue. The Cupertino, California-based tech behemoth had in 2019 pared its total sales forecast due to an economic slowdown in the country following the Sino-US trade war.

Analysts, however, expect a much-faster recovery this time as factories have restarted in China and Apple diversifies its production footprint with plants in India.

“Commentary from luxury goods companies indicates China is rebounding quickly, which implies Mar-quarter Chinese iPhone sales should be better than expected,” Evercore ISI analysts said in a note.

© Thomson Reuters 2023


Apple launched the iPad Pro (2022) and the iPad (2022) alongside the new Apple TV this week. We discuss the company’s latest products, along with our review of the iPhone 14 Pro on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.


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