Apple’s Absolutely Horrible Quarter

By Douglas A. McIntyre Published May 3, 6:25AM EDT

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Apple’s Absolutely Horrible Quarter — © Angela Kotsell / Shutterstock.com

For some reason, Apple Inc. (NASDAQ: AAPL | AAPL Price Prediction) shares rose after it announced its earnings. It is a surprise because the figures could not have been worse. Maybe the increase was because of a $110 billion share buyback, but that does not change the fundamentals of its business. Maybe it was the tepid forecast, but that only means Apple is no longer a growth stock.

The shares may have rallied by about 8% on the news, but investor skepticism remains. The stock’s year-to-date performance, down about 4%, starkly contrasts with the S&P 500’s 6% gain. The disparity becomes even more pronounced when considering the one-year period, with the S&P up 20% and Apple only about 8% higher. This is a significant departure from the stock’s usual double-digit annual growth.

Revenue took a significant hit, down 4% from the year-ago quarter to $90.8 billion, and earnings remained flat at $1.53 per share. A closer look reveals that, despite CEO Tim Cook’s optimism on the conference call, these key numbers were undeniably alarming. (See how much money Apple makes every minute.)

Apple’s survival hinges on strong iPhone sales. They are the lifeblood of the business. Revenue from the iPhone plummeted from $51.3 billion to $46.0 billion. This means that the success, or lack thereof, of the iPhone 16, set to be introduced in September, is crucial. If its new features fail to captivate customers, Apple’s predicament will worsen.

Cook said China’s results were not as bad as expected. In the world’s largest smartphone and consumer electronics market, Apple has to do better than that. Greater China revenue fell from $17.8 billion in the year-ago quarter to $16.4 billion. The company has a great deal of competition from large China-based phone companies, and global nemesis Samsung.

Make no mistake about it. This was Apple’s worst quarter since the start of the COVID-19 pandemic. At least then, it had an excuse.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.