Apple’s quarterly iPhone sales plunge 10%, but its stock price rises on dividend and stock buyback news

Apple on Thursday reported its biggest quarterly decline in iPhone sales since the start of the pandemic, deepening a slump that is increasing pressure on the pioneering company to add more value to its products artificial intelligence.

The 10% year-over-year decline in iPhone sales in the January-March period is the latest sign of weakness in a product that generates most of Apple’s revenue. It was the biggest drop in iPhone sales since the July-September period of 2020, when production bottlenecks due to factory closures during the pandemic led to a delayed release of this year’s model.

The current iPhone downturn was the main reason Apple’s revenue fell 4% year-over-year to $90.8 billion in its most recent quarter. It was the fifth consecutive quarter in which Apple’s revenue fell compared to the previous year. Apple’s profits totaled $23.64 billion, or $1.53 per share, last quarter, down 2% from a year ago.

But both Apple’s revenue and earnings per share were slightly above analysts’ forecasts, according to FactSet Research. Apple also forecast that revenue for the April-June quarter would rise slightly compared to a year earlier, ending recent erosion.

Part of the iPhone deterioration in the first three months of the year was due to a sharp increase in sales in the same period last year, when Apple said it would offset pent-up demand due to pandemic-related shipping delays.

Even if Apple stumbles slightly, it remains one of the wealthiest companies in the world. The Cupertino, California-based company made that point by announcing a 4% increase in its quarterly dividend to 25 cents per share. The company also committed to spending $110 billion to buy back its own shares, a move that was welcomed by investors but could potentially spark criticism that Apple is spending more money to cater to Wall Street than more innovative products to develop.

Helped by the increased dividend and share buyback commitment, Apple shares rose nearly 7% in extended trading following the news. The stock price has fallen 10% so far this year, wiping out about $300 billion in shareholder wealth.

Although investors are dismayed by flagging iPhone sales, they are also concerned that Apple could lose its lead as other tech giants like Microsoft and Google take the early lead in artificial intelligence technology that is expected to reshape the industry and technology .

The latest quarterly report “leaves no room for doubt about Apple’s current position,” said Thomas Monteiro, an analyst at “More than ever in the last decade, the company needs new products and solutions.”

Apple is widely expected to unveil more AI services in June during an annual conference where it will unveil the next version of its software for iPhone and Mac computers.

“We believe in the transformative power and promise of AI and we believe we have advantages that will set us apart in this new era,” Apple CEO Tim Cook assured analysts during a conference call on Thursday, promising more to come soon Details will be announced.

Weak sales in China were also a factor in the latest quarter, with revenue in the region falling 8% year over year to $16.37 billion as rival smartphone makers gained ground in one of the company’s largest markets. Still, analysts had expected the results to show an even steeper decline in sales, which gave investors some relief.

Apple also had some bright spots last quarter, particularly in its services division, where revenue rose 14% year-over-year to $23.87 billion.

The department derives a significant portion of its revenue from a lucrative deal that sets Google as the search engine that automatically answers queries on iPhones – an agreement that is at the heart of an antitrust case that ends with closing arguments in Washington this week.

Commissions charged on digital transactions within iPhone apps are also an important source of revenue within Apple’s services division. An area that is the subject of a U.S. Department of Justice lawsuit alleging the company operates an illegal monopoly that excludes competition to the detriment of consumers.

This case is expected to take several years to resolve, but European regulators are already forcing Apple to allow more alternatives to its proprietary iPhone app store under the Digital Markets Act.

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