After a year of blistering sales growth, Apple showed that it has a more resilient business than many of its tech peers, even though it cooled off in the first three months of the year.
The company reported on Thursday that profit rose 6 percent to $25 billionin its second quarter, a slowdown from the double-digit growth in each of the previous five quarters Sales increased 9 percent to $97.29 billion, exceeding analysts’ expectations, as pandemic-fueled purchases of iPads and Macs slowed from a year earlier.
The results added to a week of uneven financial reports from leading technology companies that have struggled to sustain last year’s explosive growth. Google’s parent company, Alphabet, and Facebook’s parent, Meta, had reported profit declines from a year earlier, while Microsoft posted an increase in profit.
The pandemic has been a double-edged sword for Apple. Remote school and work spurred demand for computing equipment, and government stimulus checks and cutbacks in travel and leisure spending provided a jolt to the company’s all-important iPhone business, analysts said. But those same forces sowed supply-chain problems, triggering a global chip shortage that has cost Apple billions of dollars in missed sales.
The company’s challenges have been compounded by Russia’s war against Ukraine and rising coronavirus cases in China. Apple counts on Russia for 1 percent of its sales and a slightly larger percentage of its profit, analysts estimate. In China, where most of Apple’s products are assembled, one of the company’s key suppliers had to shut down production outside Shanghai.
During the January-to-March quarter, sales of iPhones, iPads and other devices rose 6.6 percent to $77.5 billion, Apple said.
The bigger problem for Apple may come in the months ahead as economic strains from the war in Ukraine spill into Europe, said Gene Munster, a longtime Apple analyst and managing partner at the venture-capital firm Loup Ventures. “People are on edge,” he said. “They’re paying more for fuel. If you live in Germany, does that affect your decision to buy the next iPhone?”
To diversify beyond device sales, Tim Cook, Apple’s chief executive, has pushed an increasing array of software and services across Apple products worldwide. Last year, people sequestered at home splurged on apps, video games and subscriptions such as HBO Max. But amid the return to work and school, Apple said, sales growth in its so-called services business slowed, recording $19.82 billion in revenue during the quarter.
The company said it would increase its cash dividend to shareholders by 5 percent and increase its share repurchases by $90 billion.
