11/2/2023: Apple Earnings Beat Expectations
Apple reports 2023 Q3 earnings after market close today. Revenue was $89.5B vs. $89.28B expected. EPS was $1.46 vs. $1.39 expected. Services revenue was $22.31B vs. $21.35B expected. Gross margin was 45.2% vs. 44.5% expected. Despite the solid beat, AAPL 0.00%↑ stock fell 1% after the report.
Apple revenue actually went down 1% YoY and Mac sales fell 34% YoY!! But the high margin services revenue grew 16.3% YoY, which is impressive. It’s also worth noting that the annual sales for Greater China fell 2.2% in FY2023 while the annual sales for Greater China grew 70% in FY2021 and 9% in FY2022. This dramatic slowdown is worrisome and Apple’s main contract manufacturer Foxconn is facing a politically motivated tax audit from the Chinese government. It appears that China is going to be quite a big headache for Apple down the road from both the growth and the politics perspective. In fact, if China’s economic downward spiral continues, it could drag down a lot more companies including Tesla, Nike, Starbucks, etc. Apple is just one of many examples of an American company which derives 20% of revenue from China and manufactures its products there.