Apple CEO Tim Cook stands next to a latest Apple Vision Pro headset displayed in the course of the Apple Worldwide Developers Conference in Cupertino, California, June 5, 2023.
Justin Sullivan | Getty Images
Apple’s stock rallied in 2023, but its performance was outshined by all of its mega-cap tech peers, as the corporate suffered 4 straight quarters of declining revenue. It is the longest such slide for Apple for the reason that dot-com bust of 2001.
A few of Apple’s troubles this yr were as a result of a bad economic environment for phones and computers. Over the summer, total smartphone sales were the slowest in greater than a decade.
But Apple also handled some company-specific issues. Apple didn’t release latest iPad models in 2023, the primary time that is happened in a calendar yr for the reason that product was launched in 2010. Without latest models, Apple has less to advertise, and older versions of the product don’t see official price cuts that boost sales.
Earlier this month, all current model iPads were shipping from Apple’s website in a day, in response to Morgan Stanley analysts. That is an indication of weak demand because with the most popular products, Apple doesn’t have enough supply to ship that quickly.
In fiscal 2023, which resulted in September, Apple’s iPad revenue dropped 3.4% to $28.3 billion. On a unit basis, iPad sales were even worse, falling 15%, in response to a recent estimate from Bank of America analyst Wamsi Mohan. Apple doesn’t report unit sales.
To make matters worse, latest Apple Watch models were faraway from Apple stores within the U.S. days before Christmas over an mental property dispute. After a late December appeal, the devices have been returned to store shelves, but Morgan Stanley analysts estimate Apple lost about $135 million in sales per day in the course of the temporary ban.
Even for Apple’s latest products, like Mac computers, consumers showed less interest in opening their wallets for devices with minor upgrades. Sales of Mac PCs and laptops fell nearly 27% to $10.2 billion in fiscal 2023. Unit sales declined 11%, in response to Bank of America’s estimate.
Apple shares still managed to leap 49% for the yr as of Thursday’s close, topping the Nasdaq’s 44% gain. Nonetheless, investors were higher off betting on any of the opposite most-valuable tech corporations. Nvidia shares greater than tripled this yr, and Meta climbed almost 200%. Tesla’s stock greater than doubled, Amazon rose 83%, Alphabet jumped 59% and Microsoft gained 57%.
In an effort to return to revenue growth and support its $3 trillion market cap, Apple needs some latest products to hit and global demand for smartphones and laptops to recuperate.
An enormous test will come early next yr, when Apple’s first mixed-reality headset — the $3,499 Vision Pro — hits the market.
“We consider success with the Vision Pro is less about 2024 and more about its longer-term potential,” Morgan Stanley analyst Erik Woodring wrote in a note this month.
Assuming Apple ships 400,000 headsets, Vision Pro revenue may very well be about $1.4 billion next yr, in response to an estimate from UBS analyst David Vogt. He called the sum “relatively immaterial.”
Enthusiasm might be the important thing. The Vision Pro is Apple’s first completely latest device because it announced the Apple Watch, and it should be sold through Apple stores. The headset could generate foot traffic and buzz for Apple’s existing products. And there is a likelihood that it catches on enough to indicate that Apple has the lead in terms of the long run of computing.
Some problems are fixable
Looking overseas, Apple would love to see an easing of tensions between the U.S. and China.
In 2023, Apple made significant progress diversifying its centers of production away from mainland China and into countries like Vietnam and India. But its moves to expand its supply chain appear to have woke up an impulse within the Chinese government to categorise Apple as a foreign company. The White House called reports that Chinese government agencies told their employees to not bring iPhones to work “retaliation.”
The Chinese government has denied them. Yet analysts are beginning to worry that Chinese demand for iPhones, especially in the present quarter, is flagging. The iPhone stays Apple’s most vital hardware product, accounting for about half of total company revenue.
“Heading into the vacation season, iPhone unit demand stays the important thing near-term debate amidst macro woes and concerns around potential share loss in China on the resurgence of Huawei,” Citi analyst Atif Malik wrote in a note this month.
Despite its struggles, Apple stays a juggernaut. The corporate recorded $383 billion in total revenue in fiscal 2023 and earned nearly $97 billion in net income.
Since the smartphone and PC markets were in retreat, Apple gained market share in some countries, where rivals saw steeper declines. In February, Apple said it had 2 billion devices in use, a closely watched metric that investors see as a predictor of future sales from software and services.
Apple is preparing latest iPads for next yr, which could boost demand, in response to Bloomberg. The corporate has submitted a software update for its watches to the U.S. government that it hopes will clear up the mental property dispute that briefly banned sales. IPhones still have a speed advantage over Huawei’s latest devices, partially because of import restrictions on chips and chip equipment.
In November, Apple CFO Luca Maestri said the corporate’s December quarter — its biggest of the yr — might be flat compared with last yr. He warned that Macs, Wearables and iPads would see a sales drop.
But in response to analyst estimates, the full sales declines are within the rearview mirror, with mild growth expected in the primary half of the yr and acceleration after that.
“Overall, the downturn appears to be over, and we consider it’s time to see mild growth,” Bank of America analyst Simon Woo wrote in a report this month.
WATCH: Apple’s Vision Pro isn’t expected to be mainstream hit
