Apple’s iPhone Powers Through The Economic Downturn

Apple’s iPhone sales grew slightly, despite another wave of infections from the coronavirus pandemic and the highest inflation in decades.

The three months of Apple’s fiscal first quarter, ending in June, were marked by continued demand for the company’s latest smartphone, which ranged from the £699 iPhone 13 mini to £1,099 iPhone 13 Pro Max. Its Mac computers, iPad tablets and wearables categories all saw slight drops in sales, which Apple’s CFO Luca Maestri attributed at least in part to supply constraints, according to an interview with Reuters. Apple’s services effort, including Apple TV Plus, was the only other division that showed growth. 

All told, Apple said it notched profits of £19.4 billion, down 10% from the same last year.  That translates to £1.20 per share in profit, off nearly £83 billion in overall revenue, which itself was up nearly 2% from the £81.4 billion reported last year. It was also enough to beat average analyst estimates, which were £1.16 per share in profits on £82.8 billion in revenue, according to surveys published by Yahoo Finance. The iPhone in particular showed steady demand, hitting almost £40.7 billion in sales, up nearly 3% from the £39.6 billion it reported last year. 

“This quarter’s record results speak to Apple’s constant efforts to innovate, to advance new possibilities, and to enrich the lives of our customers,” Apple CEO Tim Cook said in a statement.  “Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment,” Apple’s CFO Maestri added.  Apple’s stock closed up less than 1% at £157.35 per share before the release, and rose another 1% afterward.

Earlier this year, investors pushed the company’s shares above £3 trillion for a short period before the broader market — including tech stocks — began a precipitous fall amid rising energy prices and interest rates. It’s currently valued at about £2.5 trillion. Apple’s latest financial disclosures are just the latest sign of how the coronavirus pandemic and events halfway around the world can impact the economy in radical ways.

Though many businesses struggled through the pandemic, our reliance on big tech fueled increased financial performance across the industry, until recently. Now, as the world grapples with the highest inflation in decades, retailers like Walmart have begun warning that customers are slowing purchases. Google and Facebook have added to those concerns, reporting surprise drop-offs in online advertising spending.

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Facebook parent Meta CEO Mark Zuckerberg said in a call with analysts Wednesday. “It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago.”