Apple management hints that things are getting better after a tough quarter

Apple on Thursday announced financial results for its fiscal 2023 first quarter ended December 31, 2022. The company posted quarterly revenue of $117.2 billion, down 5 percent year over year, and quarterly earnings per diluted share of $1.88.

Luca Maestri
Apple CFO Luca Maestri

Apple blamed “a difficult macroeconomic environment and significant supply constraints,” for the underperformance, but management hinted at better times to come during their conference call with analysts following the warning release.

Kif Leswing for CNBC:

Apple reported a tough December quarter on Thursday, including the company’s biggest quarterly revenue decline since 2016, along with sales drops in its iPhone, Mac and wearables businesses.

At first, investors didn’t like the results, with Apple shares dropping as much as 4% in extended trading. But the stock had a brief rally after Chief Financial Officer Luca Maestri started to give data points on a call with analysts, suggesting Apple’s performance will get better during the current quarter even if overall sales will still be down from last year.

“For iPhone, we expect our March quarter year-over-year revenue performance to accelerate relative to the December quarter year-over-year revenue performance,” Maestri said. “This represents an acceleration in our underlying year-over-year business performance, as the December quarter benefited from an extra week.”

In addition, Covid lockdowns at factories in China were a big factor in the shortfall, but Apple said on Thursday that its production was back to a level it was comfortable with, suggesting that supply won’t be as big a drag on the March quarter as it was in December…

“We expect gross margin to be between 43.5% and 44.5%…,” Maestri said.

Apple’s margins remain significantly higher than they were before the pandemic. For example, in the quarter ending in December 2019, the last full quarter before the Covid pandemic was declared, Apple reported a gross margin of 38.4%.

“We’re doing a lot of work on the cost structure and that is paying off,” Maestri said.

MacDailyNews Take: The silver lining in Apple’s Q123 results will be deferred iPhone 14 Pro and iPhone 14 Pro Max sales realized this quarter.

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