Apple ups guidance despite slide in iPhone sales

Sales of iPhones fell heavily in the three months to March, but an uptick in demand at the end of the quarter has allowed Apple to up its guidance for the next quarter.

Net sales came in at $58bn compared to $61.1bn for the same period a year ago. Some of the biggest declines were seen in China, where net sales fell from $13bn to $10.2bn. Global sales of the iPhone – by far Apple’s biggest revenue generator – were $31bn, down from the $37.6bn a year earlier.

Net income eased from £13.8bn to $11.6bn, while diluted earnings per share fell 10% to $2.46.

However, sales of iPhones improved towards the end of the three months, as price cuts helped underpin lagging demand, especially in China.

Apple also pointed to a strong performance in services, where net sales rose to $11.5bn from $9.9bn. Apple is looking to move away from its reliance on products and in March unveiled a range of new services, including TV streaming platform Apple TV+.

The company is now expecting revenues of between $52.5bn and $54.5bn in the third quarter, above Wall Street forecasts.

Shares rose nearly 6% ahead of the opening bell.

Tim Cook, chief executive, said: “Our March quarter results show the continued strength of our installed based over 1.4bn active devices, as we set an all-time record for services, and the strong momentum of our wearables, home and accessories category, which set a new March quarter record.

“We delivered our strongest iPad growth in six years and we are as excited as ever about our pipeline of innovative hardware, software and services.”

Naeem Aslam, chief market analyst at ThinkMarkets, said: “The tech giant delivered a very clear message: the demand for iPhones is reviving. Apple’s premium for its phone was getting out of proportion and given that the company has decided to trim that premium, this has helped its iPhone sales.”

Neil Wilson, chief market analyst at Markets.com, said the third-quarter guidance was “especially impressive” and said it would represent a "welcome return to growth” at the top of the range.

However, he cautioned: “Services revenues climbed 16%. Without wishing to sound like a killjoy, there ought to be some mild concern that the growth rate is slowing from the fiery levels we saw last year, when we got 30% prints.”

Morgan Stanley increased its price target following the results, to $240 from $234. It said: “Apple beat consensus revenue by 1% and EPS by 3%, driven largely by iPhone, where we saw improving share in China and stable supply builds through the quarter.

“More importantly, June quarter guidance for a revenue decline of 8% quarter-on-quarter is materially better than historical seasonality of 13%-16% quarter-on-quarter declines, and consensus view of -11%. Better revenue guidance speaks to the improved iPhone trajectory in the month of March, which carried into April.”

Apple had issued a shock profit warning at the start of the year, hurt by the economic slowdown in in China and falling demand for iPhones globally.