Apple on Thursday posted its fourth straight quarter of year-over-year sales declines as the iPhone maker continued to struggle with sluggish device sales amid an uncertain economy.
The company reported sales of $89.5 billion for the three months ended Sept. 30, down 1% from the same period last year and basically in line with Wall Street analysts’ estimate of $84.3 billion. Despite the increase in sales, Apple’s net income for the quarter rose nearly 11 percent year over year to $22.96 billion, beating analysts’ forecasts.
Shares of Apple ( AAPL ) fell more than 1% in afternoon trading after the report.
“In the September quarter, we will continue to face a volatile macroeconomic environment,” Apple CEO Tim Cook said on an analyst call Thursday. “We continue to invest in the future…we have continuously adapted to circumstances beyond our control while thinking and spending.
Revenue from Apple products fell more than 5% year over year in the September quarter, mainly due to lower Mac and iPad sales. (CFO Luca Maestri said on the analyst call that the production unit faced a difficult comparison to the previous quarter, when the company fulfilled many orders that were backed up by earlier supply disruptions.)
iPhone revenue, however, rose 3 percent from the previous quarter to $43.8 billion, setting a record for iPhone sales in the September quarter.
Apple hit a record for installed devices in active use across all of its products and geographic segments, Maestri said on the analyst call.
The sales numbers could provide an early indication of the iPhone 15’s performance, after analysts worried consumers had little incentive to upgrade because the new lineup showed only minor improvements. However, the iPhone 15 lineup went on sale eight days before the end of the September quarter, so the real impact may not be felt until Apple reports for the crucial holiday quarter. Earlier this week, the company rolled out updates to its laptops and desktop computers.
“We believe this dangerous macro. [economic] environment, coupled with a mature market will lead to an unsustainable iPhone 15 cycle.” Mones Crespi Hardt analyst Brian White said in a research note ahead of Apple’s Thursday earnings report.
“It’s too early to call the iPhone,” Cook said Thursday.  Cycle… It’s too early to say what the update rates will be and what the conversion rates will be.
Analysts pointed to a 2.5% year-over-year decline in Apple’s China sales in the September quarter as an indication that the iPhone maker may be losing ground in that crucial market.
“Apple’s disappointing China sales figures suggest that demand for high-end iPhones has weakened more than expected amid increased competition from local companies including Huawei,” Investing.com senior analyst Jesse Cohen said in an emailed statement following Thursday’s report.
Cook, however, told analysts that Apple faces a difficult exchange rate in China, and that iPhone sales actually hit a record in China’s September quarter. He said the increase in sales in the region was due to a decline in Mac and iPad revenue, similar to the company’s overall results.
Sales growth in Apple’s services division, however, continued to partially offset the decline in device revenue growth. Revenue from the Services division, which includes Apple’s subscription products such as Apple TV+, rose more than 14 percent year-over-year in the September quarter, setting an all-time quarterly record of more than $22 billion.
And the company could see more growth from its services business in the December quarter after Apple last month increased subscriptions to Apple TV+, Apple Arcade and Apple News by $2 or $3 per month.
Apple expects total company revenue in the December quarter to be about the same as last year, Maestri said, adding that the December 2023 quarter is one week shorter than a year ago.
Cook on Thursday also teased the launch of its Vision Pro mixed reality headset, which is expected to be available to consumers early next year. Developers have been working with the product in select developer labs that Apple has set up to build apps around the world, he said, and “there are some types of things that are coming out.” Cook added that the Vision Pro will initially be sold only in Apple stores so the company can teach consumers how to use it.