(Image source: Apple)
With the recurrence of the new crown epidemic, the supply chain setback and the slowdown in the global mobile phone market have caused the stock of the world's largest technology giant to suffer a "roller coaster".
In the early morning of April 29, Beijing time, Apple (NASDAQ:APPL) released its performance report for the second fiscal quarter of fiscal 2022 (Q1 2022) ending in March this year.
According to the financial report, Apple's 2022 Q1 operating income was $97.278 billion, an increase of 8.59% year-on-year; net profit increased by 6% year-on-year to $25.01 billion; earnings per diluted share (EPS) was $1.52, up 8.57% year-on-year, but down 27.6% month-on-month; gross margin was 42.5%.
Although Apple surpassed $97 billion in revenue this quarter, the third largest in Apple's more than 40-year history, the performance still made the market think that it was "beyond expectations." However, in the face of the continued supply chain disruption caused by the new crown epidemic and the negative impact of the increased international instability, it is difficult for Apple to stand alone.
In a conference call after the earnings report, Apple's chief financial officer Luca Maestri said that multiple challenges in the second quarter, including supply constraints related to the epidemic, may lead to a reduction in sales revenue of $4 billion to $8 billion, and demand in the Chinese market is also affected by the epidemic.
She stressed that sales in the new product period in the second half of the year are also difficult to predict, because it is possible that the second half of the year will also be subject to the epidemic and supply constraints.
Apple CEO Tim Cook also said that Apple's exit from the Russian market will also have a negative impact on the growth of performance in the second quarter. Coupled with inflation, Apple is also closely monitoring the price situation, and caution is still greater than optimism.
Before the release of this morning's earnings report, Apple's stock price, which closed up more than 4%, fell more than 1% after hours, and after the earnings report, Apple quickly rose after hours, and the after-hours rose by more than 3%. During the conference call, affected by the news of the decrease in sales in the next quarter, the stock price turned down again, and the after-hours decline reached 6%.
As of press time, Apple's latest report closed at $163.64 per share, up 4.82% and a market capitalization of $2.67 trillion.
iPhone revenue of $50.57 billion, revenue growth in China slowed down
Apple's chief financial officer Luca Maestri commented on the first quarter results, saying that the operating income of the services business in the quarter hit a record high, and the revenue of iPhones, Mac computers, wearable devices, home products and accessories all hit a new high in the same period in the first quarter.
Specifically, according to the product line division, Apple's iPhone still accounts for more than half of the total revenue, at $50.57 billion, an increase of 5.5% year-on-year; iTunes, App Store and other software service revenue ranked second, maintaining a double-digit surge, with revenue reaching $19.82 billion, a new high for five consecutive quarters.
Mac revenue also grew in double digits to $10.435 billion; iPad revenue fell to $7.664 billion, down 2.06% year-over-year and up 5.7% sequentially; wearable device and accessories revenue fell below market expectations to $8.806 billion, up 12.4% year-over-year.
In addition, Apple's earnings report shows that since March last year, the number of users of Apple's software services has soared by 165 million, from 660 million to 825 million today, an increase of 25% year-on-year.
By region, Apple's revenue growth in China and Europe slowed down significantly in the first quarter, and revenue in the Asia-Pacific region such as India turned from increase to decline. Of the regions, only the Americas saw revenue growth exceed expectations, growing at nearly 20 percent.
According to the financial report, in Q1 2022, Apple's revenue in Greater China was $18.343 billion, an increase of nearly 3.5% year-on-year, an increase of nearly 21% month-on-month; the revenue of the Americas market was $40.882 billion, an increase of 19.2% year-on-year; the revenue of the European market was $23.287 billion, an increase of 4.6% year-on-year; the revenue of the Japanese market was $7.724 billion, down 0.23% year-on-year; and the revenue of the Asia-Pacific market outside China and Japan was $7.742 billion, down 6.65% year-on-year, an increase of 19% over the fourth quarter of last year.
For the next quarter's performance expectations, Apple will not announce it on the grounds that the future is full of uncertainty. This is also Apple's lack of performance expectation guidance for nine consecutive quarters. But Apple said the pandemic, exit from Russia and high inflation all affected second-quarter results, down as much as $8 billion year-on-year.
Global mobile phone shipments shrank, and Apple said it would not rule out the acquisition of large companies
This morning, the global smartphone market report released by market research agency Canalys showed that in the first quarter of 2022, global smartphone shipments reached 311.2 million units, down 11% year-on-year. Among them, Apple's Q1 shipments are about 56.5 million units, with a growth rate of only 8%.
Canalys analyst Toby Zhu said that the decline in shipments is mainly due to the decline in China's mobile phone market caused by nearly half of the world's decline, including the epidemic, seasonal weakness (Spring Festival), supply chain production and logistics disruptions, all of which are affecting global mobile phone shipments.
Apple mobile phone shipment statistics (source: Wind data, IDC, etc., edited by Titanium Media App)
At the same time, the Titanium Media App combed through apple iPhone shipment data from 2008 to 2021.
We found that since the release of the iPhone 7 in 2016, apple phone shipments have continued to decline. Although in 2020, Apple released the 5G-enabled iPhone 12 series of mobile phones, but the growth rate is still slow.
In addition to the economic and supply chain instability caused by the new crown epidemic, the growth rate of the iPhone is also related to the commercial use of 5G networks that are lower than expected, and the price of Apple mobile phones continues to increase.
Since Apple has no longer announced iPhone sales since 2018, and the sales in the financial report and the growth rate of shipments assessed by the market are less than double digits, Apple's mobile phone sales have slowed down significantly.
So, as one of Apple's most important iPhone sales markets, has the Chinese mobile phone market also slowed down?
Through the monthly analysis report of the mobile phone market tracked by the China Academy of Information and Communications Technology, Titanium Media App sorted out the shipment data of 5G mobile phones from January 2021 to February 2022, as well as 2/3/4G mobile phone shipments.
We found that in the past year or so, compared with other mobile phone shipments, 5G mobile phone shipments have not been stable, and there has been no significant growth. This may be related to the new crown epidemic and the slow deployment of 5G base stations.
In addition to the off-season of mobile phone sales during the Spring Festival in February every year, titanium media App noted that during the peak season of mobile phone new product releases from April to September, it was far less than the shipments around Double Eleven. Moreover, since November last year, the shipments of domestic 5G mobile phones and other mobile phones have decreased, and the sales growth of the domestic mobile phone market has slowed down significantly.
According to IDC's latest China smartphone market shipments report released this morning, in the Q1 quarter of 2022, China's mobile phone market shipments were about 74.2 million units, down 14.1% year-on-year. Among them, Apple's mobile phone shipments were lower than honor, OPPO and vivo, about 12.4 million units, down 5.8% year-on-year.
For the current slowdown in the mobile phone market and environmental changes, in addition to expanding the supply of production capacity and reducing prices, Apple CEO Cook mentioned the issue of acquiring large companies for the first time today.
Cook said that while Apple has not made many major acquisitions to date, it does not rule out the possibility of major mergers and acquisitions in the future, with a particular focus on intellectual property and talent — which means that Apple is more considering technology-based companies.
"We're always looking for companies that can be bought, like buying a lot of smaller companies, mainly Apple, which wants to get intellectual property and attract talent. If the opportunity arises, we will not discount the acquisition. I've been looking at the list of Apple acquisition targets, and we've been looking for them .) Cook said.
According to the financial report, Apple's current operating cash flow is as high as $28.2 billion, and it is fully capable of acquiring fitness brand Peloton or long-distance video company Netflix.
Among them, Dan Ives, an analyst at Wedbush Securities, said in an interview with the media that Apple should acquire Peloton, which will help apple watches and fitness software service Fitness+ grow. He also believes that Apple should acquire Netflix instead of developing the Apple TV+ service from scratch.
However, analysts are more worried that supply chain shortages will continue for a long time and will become the key to Apple's next quarter's financial data. At present, Microsoft, Texas Instruments and other companies have warned that the current supply chain crisis will affect the long-term performance of enterprises.
(This article was first published on titanium media App, author | Lin Zhijia)