Apple surpasses Wall Street estimates for fiscal third quarter, but inflation and residual pandemic problems hamper results

Apple beat Wall Street in its fiscal third quarter, but its results highlighted the negative impact of China’s supply shortages and closures, currency fluctuations, inflation and other challenges as the tech giant faces. an uncertain landscape, emerging from the worst of Covid.

Revenue increased 2% year-over-year to $ 83 billion and diluted earnings per share was $ 1.20, down from $ 1.30 in the comparable period of 2021. Wall Street analysts had expected earnings of $ 1.16 on revenue of $ 82.8 billion.

Following the results, Apple stock was up 3% in after-hour trading. Executives offered initial guidance, but no formal guidance, for Apple’s fiscal fourth quarter during a conference call with analysts and did not indicate any major cause for concern. Investors are looking for signs that the company is facing more serious turmoil after being on track for record financial and equity valuations for most of 2020 and 2021, despite multiple logistical challenges and store closings.

Sales of the company’s exclusive iPhones reached $ 40.7 billion, up 3% from the previous year. The growth rate marked a significant slowdown compared to the last few quarters. During the earnings call, CEO Tim Cook said iPhone sales were primarily affected by currency exchange rather than other factors, including supply chain disruptions.

The company’s services division also posted modest earnings, with the company registering 860 million subscribers to software or services such as iCloud or Apple Music, up from 825 million in the previous quarter. Service revenues increased 12% to $ 19.6 billion, beating analysts’ expectations of $ 19.7 billion. The increase was almost a third compared to the previous quarter.

Apple had previously warned investors of a possible $ 4-6 billion hit to quarterly results, but Cook said the final report showed the damage wasn’t as bad as initially feared. Sales of Macs and iPads in regions clustered around China, which has followed a “zero Covid” policy with frequent and severe lockdowns, should have shown the weakest. Chief Financial Officer Luca Maestri said in the company’s earnings release that the quarterly results “continue to demonstrate our ability to run our business effectively despite a challenging operating environment.”

Asked how long it can withstand recessive weather conditions, Cook said the company sees “digital ad cloud, if you will, continue into the current quarter.”