The latest version of the iPhone and continued growth in its services division helped Apple bounce back from a year of declining sales during the holiday quarter, despite potential legal challenges that could impact its future success.

Apple’s earnings report for the October-December period revealed a small increase in revenue, breaking a streak of four consecutive quarters of declining sales. However, this positive result may not be sufficient to address recent worries from investors about Apple’s ability to regain the momentum that once made it the most valuable publicly traded company in the U.S.

After being the leader for many years, Apple has now been surpassed by its long-standing competitor Microsoft, whose success can be attributed to its early dominance in artificial intelligence.

Apple plans to change the conversation in their favor by launching their Vision Pro headset on Friday. This headset allows users to experience a blend of physical and digital settings, which Apple refers to as “spatial computing.” However, the initial version of the Vision Pro will be priced at $3,500, a high cost that analysts predict will limit its demand this year.

During a conference call on Thursday to discuss the latest quarterly results, Apple CEO Tim Cook expressed his optimism for the future, long-term confidence, and excitement at an all-time high.

Although there are concerns about Apple’s potential decrease in growth compared to their impressive track record over the last two decades, the company is still prospering in Cupertino, California.

In the last quarter, Apple’s revenue increased by 2% compared to the previous year, reaching $119.58 billion. The company’s earnings also saw a 13% growth from the same time last year, with a total of $33.92 billion or $2.18 per share.

As expected, the majority of Apple’s earnings came from iPhone sales. The company made a total of $69.7 billion in revenue from their flagship product in the last quarter, showing a 6% growth compared to the previous year. These numbers include the latest iPhone released in late September, which includes a high-end version with a unique video recording feature specifically designed for playback on the Vision Pro.

The division of Apple that offers services, mainly related to the iPhone, saw a revenue increase of 11% from the previous year, reaching $23.12 billion.

According to FactSet Research, the revenue and earnings for the quarter both surpassed the predictions of analysts.

Apple has released a conservative prediction for the current quarter of January to March, suggesting that iPhone sales may decrease compared to last year. This further supports the idea that the company is experiencing financial difficulties. As a result, Apple’s stock price dropped by over 3% in extended trading on Thursday. If the stock continues to decline during Friday’s regular trading, the company’s market worth will have decreased by approximately $200 billion, or 6%, since the beginning of the year.

Apple’s services division, which has been experiencing steady revenue growth in the double digits, is currently facing legal challenges. These challenges could potentially impact the revenue generated through a search deal with Google and commissions earned from transactions made on the iPhone app store.

Apple’s decision to designate Google as the default search engine on the iPhone and Safari browser, which generates an estimated $15 billion to $20 billion in revenue each year, is the main focus of an antitrust case brought by the U.S. Department of Justice. This case will enter its final stage in May. In addition, a separate antitrust case filed by Epic Games and new regulations in Europe have already prompted Apple to modify its commission structure in the iPhone app store. However, critics argue that these changes are not significant enough and are vowing to continue advocating for more substantial reforms.

During the previous quarter, there was a decline in sales in China, which is a significant market for Apple. This has been a cause of concern for investors due to the country’s economic slowdown and rumors that the government may restrict its employees from purchasing iPhones. Apple’s revenue in China decreased by 13% to $20.82 billion compared to the previous year.

Source: wral.com