Apple's revenue, profit up despite slowing economy; not immune to recession

Apple managed to boost its sales, profit during summertime quarter that depressed fortunes of many major tech companies, but that doesn't necessarily mean it will be immune to a potential recession

Apple managed to boost both its sales and profit during a summertime quarter that depressed the fortunes of most other major tech companies, but that doesn't necessarily mean the iPhone maker will be immune to a potential recession.

Even though Apple fared reasonably well, the July-September results released Thursday signalled that the world's most valuable company is facing some of the same economic headwinds that hammered the profits of Microsoft and the corporate parents of both Google and Facebook.

Apple's fiscal fourth quarter revenue rose 8% from the same time last year to $90.1 billion.

That was an improvement from the scant 2% uptick in revenue during its April-June quarter when supply problems caused by pandemic-related factory shutdowns dinged its sales.

The Cupertino, California, company's profit for the most recent quarter totalled $20.72 billion, or $1.29 per share, up by less than 1% from the same time last year.

Both the revenue and earnings per share were slightly above analyst estimates.

But on the downside, sales of Apple's most popular product, the iPhone, and another big moneymaker, and the services division, were both lower than analysts had been anticipating a sign consumers may be cutting back amid the highest inflation in 40 years.

Apple is facing increasingly difficult economic conditions," CEO Tim Cook acknowledged during a Thursday conference call with analysts. A lot of people in a lot of places are struggling."

Apple's shares dipped 1% in extended trading after the numbers came out, deepening a downturn that has been dragging down the high-flying stock throughout most of this year.

Apple's stock has dropped almost 20% so far in 2022.

The iPhone still Apple's marquee product 15 years after its debut accounted for most of its success during the past quarter, even though the company didn't sell quite as many of the devices as analysts had hoped.

Boosted by the release of four new models in late September, iPhones sales climbed 10% from the same time last year to $42.63 billion.

But industry analysts are starting to fret over how much longer consumers will splurge on new phones as they feel the pinch of the past year's stubbornly high inflation rates.

If those financial pressures persist, it could cause more households to curtail their spending during the holiday shopping season, especially on the kind of pricey gadgets that are Apple's cornerstone.

That's one of the primary reasons the research firm International Data Corp. is now expecting worldwide smartphone shipments this year to fall 6.5% from 2021, a downward revision of three full percentage points translating into about 150 million fewer devices being sold from an earlier forecast made in May.

Apple won't suffer as much as the makers of phones running on Google's Android operating system, IDC predicted, but it still will result in a significant slowdown.

IDC projects iPhone shipments will edge up by less 0.5%, with the average selling price of the device hovering around $950.

Through the first nine months of this year, iPhone sales are up 6% from last year.