Apple Inc. 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% 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% 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 in 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 a lack of product availability in the holiday period, BofA analyst
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 2019 pared its total sales forecast due to an economic slowdown in the country following the Sino-U.S. 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.
