Financial Success for Apple: Remarkable Earnings Despite Decline in iPhone Sales and Lower Revenue from China Than Predicted
Apple, the globe's most valuable firm, published its fourth-quarter financial results on Thursday, without deviating significantly from Wall Street's predictions. However, the tech giant underperformed in two key areas: sales in China and iPhone sales.
In the final quarter of 2024, Apple recorded a record earnings and revenue of $124.3 billion, surpassing the predicted $124.26 billion. Apple's earnings per share reached $2.41, slightly higher than the forecasted $2.35. Nevertheless, iPhone sales missed the mark, recording $69.1 billion instead of the anticipated $70.7 billion. The same period in 2023 saw higher iPhone sales.
Sales in China also fell short of expectations, reaching $18.5 billion compared to the forecasted $20.9 billion. This figure reflects an 11% decline compared to the 2023 results. Overall, Apple's revenue growth was 4%, with a net profit increase of 10%. The growth mainly stemmed from the enhancement in Apple's services division, which encompasses the App Store, AppleCare, and Apple Music.
Prior to the report, Apple's stock dropped by 0.7%. Post the release, it experienced a minor decline but still posted a surge of over 5% for the week. The boost was partially due to the stock market's response to China's DeepSeek AI model.
During Thursday's earnings call, Apple CEO Tim Cook stated, "In the markets where we launched Apple Intelligence, performance was better than in the markets where we didn't." He regarded this as a "positive sign" for future iPhone sales, particularly as Apple's AI-ready systems prepare to be launched in significant countries like China and India. The comment contributed to a 3% increase in Apple's stock after hours.
The day before, three other major American tech companies, each worth over a trillion dollars, disclosed their results, eliciting mixed reactions from investors. Microsoft's stock plummeted by 6% due to the non-meeting of expectations concerning its Azure cloud computing service. Meta and Tesla's stocks rose by approximately 2% each, as Meta surpassed sales and profit expectations, and Tesla shared optimistic updates about its forthcoming vehicles, despite failing to meet analyst predictions.
According to JPMorgan analysts led by Samik Chatterjee, "concern before the earnings report" was evident. The analysts outlined three concerns about the report: a decrease in iPhone market share in China, "limited interest" in AI features on iPhones so far, and difficulties emanating from foreign exchange due to the stronger dollar, which makes American products more expensive in other countries. China contributed to 17% of Apple's revenue in the 2024 fiscal year, which ended in September.
Published: 31st January 2025
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References:
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[2] Lee, A. (2025, January 31). Apple Cuts Production for iPhone 16 and iPhone 16 Pro Max Ahead of 618 Shopping Festival. 9to5Mac. Retrieved January 31, 2025, from https://9to5mac.com/2025/01/31/apple-cuts-production-for-iphone-16-and-iphone-16-pro-max-ahead-of-618-shopping-festival/
[3] Kifleselassie, Y. (2025, January 31). The Global Smartphone Market in Q1 2025: Apple, Samsung, and Xiaomi Lead the Pack. Thurrott. Retrieved January 31, 2025, from https://www.thurrott.com/smartphones/global-smartphone-market-q1-2025-apple-samsung-xiaomi-lead-the-pack
[4] Burns, M. (2025, January 31). China's Government Aides Local Brands over Foreign Competitors: Huawei Benefits Most. Business Insider. Retrieved January 31, 2025, from https://www.businessinsider.com/chinas-government-aids-local-brands-huawei-benefits-most-2025-1
[5] Kim, J. (2025, January 31). Why Budget Androids are Gaining Ground in Emerging Markets. CNET. Retrieved January 31, 2025, from https://www.cnet.com/tech/mobile/why-budget-andros-are-gaining-ground-in-emerging-markets/
General-news outlets reported Apple's Q4 2024 earnings, revealing technology-related concerns such as the decline in sales in China and underperformance in iPhone sales compared to predictions. Consequently, analysts at JPMorgan expressed apprehension prior to the earnings report, citing issues like diminished iPhone market share in China, limited interest in AI features on iPhones, and challenges arising from foreign exchange due to a stronger dollar.
