Tech behemoth Apple could report its first decline in quarterly revenue in nearly four years, reports claim.
A weak economy has prompted many tech companies to lay off employees in large numbers recently but Apple has managed to stand its ground in the face of challenges by not hiring too many people.
But now it appears that some decline in revenue is inevitable, especially after disruption to the production cycle caused by the Covid-19 pandemic and the strict lockdown in China that only recently ended. Apple has been looking to diversify its manufacturing portfolio for quite some time now - with more interest in India and Vietnam.
Apple's woes continue
Apple has suffered when protests related to China's strict Covid-19 curbs brought production to a halt at a Foxconn plant, Apple's biggest hardware supplier.
The iPhone maker, which is scheduled to report its December quarter after markets close on Thursday, is expected to announce its first revenue decline in nearly four years as manufacturing disruptions in China curbed its ability to deliver premium iPhones.
Reuters reported that iPhone sales fell by about 5% in the holiday quarter of 2022, considered the peak season for gadget sales - and the company is expected to acknowledge the same in the coming days.UBS analysts expect iPhone sales to have held up better in the United States than China and Europe, as the economies reeled from the impact of COVID-19 and the Russia-Ukraine war. The last time iPhone sales fell was during the peak of Covid-19 pandemic in August-October 2020. For the important holiday quarter, the company struggled to keep up with demand for its latest premium iPhone 14 Pro models as China’s zero-Covid policies caused upheaval at a smartphone factory in Zhengzhou. In November, Apple issued a rare warning about disruptions to output of the iPhone 14 Pro. Even then, iPhone sales are expected to hold steady in the United States compared to China and Europe that have been affected by the Covid-19 pandemic and Russia's invasion of Ukraine.
Apple services like Apple Music and Apple TV+ are also expected to report their lowest revenue growth for the last quarter of 2022, adding to the company's woes.Even after disruptions at Chinese plants and the negative impact of Covid-19 pandemic, Apple is expected to pick up the pace this year as production resumes in China and diversification begins with focus on India.Analysts, however, expect a much-faster recovery this time as factories have restarted in China and Apple diversifies its production footprint with plants in India.