Apple’s financial result is affected by manufacturing problems in China

by Jerry

Apple reported its financial results for the last quarter of 2022. The Tim Cook-led company had revenue of $117.2 billion, lower than expected for the fourth quarter of the year. These figures were impacted by the fall in smartphone sales, electronics factory closures in China and inflation in the United States.

In the general scenario, compared to the other Big Techs, Apple still has something to celebrate. It closed the fourth quarter of 2022 (Q4) with a profit of $29.998 billion —Amazon posted a loss in 2022 and closed the same period with a “profit” of $2.73 billion. Even with the decline in electronics sales, Apple hasn’t had a loss-making split — while Meta’s Reality Labs remains in the red, vermalhaço.

Apple does not surpass record revenue at the close of 2022
Closing a quarter with revenue of $117.2 billion is any company’s dream. However, the Q4 period is the Christmas season, where companies usually “take their foot out of the mud.” In Q4 2021, Apple had the largest revenue in its history, totaling $123.9 billion.

This difference in consumption habits between the times of the year, which has its peculiarities in each country, is a reason to make the same periods between the same periods of different years — Q1 2022 with Q1 2021, Q2 2022 with Q2 2021, etc.

The drop in revenue was expected for Q4 2022. In December, newspapers reported that problems in Chinese factories, with government closures and Covid Zero policy, and inflation in the United States, accompanied by fears of a recession, would reduce Apple’s sales. These reasons were also cited by Tim Cook in an interview with CNBC.

To address this situation, Apple is expanding the manufacturing capacity of its devices in other countries, such as India and Vietnam. By 2025, 25% of the world’s iPhones will be manufactured in India.

The low stock of iPhones is a downside for anyone who wants to buy a device for Christmas. With long waiting time, people prefer to buy another gift to arrive on the 25th with shaking hands. However, there are chances for Apple to recover these sales in early 2023.

The improvement in inventory attracts shoppers, who can anticipate gifts from other dates or take the opportunity to celebrate Valentine’s Day on February 14.

Some traditions don’t change. Again, regardless of the quarter, the iPhone was Apple’s best-selling product in Q4 2022. The company’s smartphone generated revenue of $65.78 billion for the company. The number represents a drop of 8.17% compared to Q4 2021.

The biggest increase in sales were from iPads. Revenue from Apple tablets rose 29.66% in Q4 2022, beating $9.39 billion versus $7.24 billion in the same period in 2021. The change in iPadOS 16, more user-friendly for multitasking actions, and popularization of USB-C on the iPad (even slow, it’s still USB-C) may be one of the reasons for the tablet’s success.

The Mac line had the biggest fall between the devices. Revenue from Apple computers fell to $7.73 billion in Q4 2022 — $10.85 billion in Q4 2021.

Sales of wearables, accessories and home appliances fell slightly: it dropped from revenue of $14.7 billion in Q4 2021 to $13.48 billion in the last quarter of 2022. Apple’s services division, on the other, has had growth. This sector of the company closed Q4 2022 with revenue of US$ 20.76 billion, against US$ 19.51 billion in the same period of 2021.

However, even with better results than many competitors, Apple still cares about the macroeconomic scenario. At CNBC, Tim Cook, the company’s CEO, revealed that the company still has spending to cut. However, he did not let it air if this would involve a mass resignation.

Cook repeated something already known to the press and readers of tech and finance news: Apple will not hire and will be very cautious when it needs to put new people in the company. In this case, Cook should be talking about hiring for more managerial positions and on large projects such as Apple Car and VR glasses.

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