Apple Exceeds Analyst Expectations, Faces Challenges in China

Apple has released its latest quarterly financial results, covering the period from October to December 2024. The technology giant reported a revenue of $124.3 billion, along with a net profit of $36.3 billion, resulting in earnings of $2.40 per diluted share. This performance surpassed analysts' predictions, which had estimated revenues of $124.1 billion and earnings of $2.35 per share. In the same quarter of the previous year, Apple had generated $119.6 billion in revenue and a net profit of $33.9 billion, with earnings of $2.18 per diluted share.

Despite these positive overall results, Apple continues to struggle in the Chinese market. Revenue from China dropped by 11% to $18.5 billion, contrasting sharply with analysts' expectations of a $21.6 billion increase. The decline is attributed to a growing preference among consumers for local brands, such as Huawei, which are increasingly competing with Apple's iPhone offerings. The sales figures for the iPhone line, particularly the iPhone 16 introduced in September, saw a slight decrease of less than 1%, totaling $69.1 billion.

In contrast to the challenges faced in China, Apple reported significant growth in its Mac and iPad segments, with revenues rising to $8.9 billion from $7.7 billion in the previous year's quarter, and $8 billion from $7 billion, respectively. Additionally, the services sector saw a revenue increase of $3 billion, reaching $26.3 billion. However, sales from accessories, including the Apple Watch and home devices, experienced a minor decline, falling from $11.95 billion to $11.74 billion.

Tim Cook, Apple's CEO, emphasized the company's record-breaking financial performance, highlighting a 4% increase in revenue compared to the previous year. He expressed optimism about future innovations powered by Apple Silicon and the forthcoming capabilities of Apple Intelligence, although he noted that not all features of the AI system are yet available, with a rollout planned for April in the European market.

The stock market's reaction to Apple's earnings report was muted, with shares dipping 0.75% shortly after the announcement. Nevertheless, Apple announced it would issue a dividend of $0.25 per share, which will be distributed starting February 13. The company returned a total of $30 billion to shareholders in the last quarter via stock buybacks and dividends.

In terms of geographical performance, revenue increases were noted in Europe, up by $3 billion, and the United States, which saw a nearly $2 billion increase. Japan's revenue also grew by more than $1 billion. Cook mentioned in a subsequent analyst call that there are positive trends associated with Apple Intelligence, pointing to growth in all markets where the AI system has been launched, compared to the previous year. He also indicated that the new iPhone 16 models have generally outperformed their predecessors, despite the overall revenue decline.