Can't sell it anymore? Apple's market value evaporated by trillions of yuan overnight! Cook's Voice Pro | Quarterly | Hardware | Market | Products | Cook | iPhone | Apple

On August 4th local time, Apple's stock price plummeted by 4.8%, marking the largest single day decline this year. Its market value evaporated over $160 billion in just one day, falling below $3 trillion.

Although this scene also occurred last year, unlike the sharp decline in technology stocks at the time, the bearish risk faced by Apple this time is more from itself: the latest financial outlook of this iPhone manufacturer has raised concerns among investors about weak demand for its phones and other devices.

According to Wind data, after the US stock market closed on August 3 local time, Apple released its third quarter report for the 2023 fiscal year. The financial report shows a total revenue of $81.8 billion, a year-on-year decrease of 1.4% from $83 billion in the same period last year, and a month on month decrease of nearly 14% from $94.84 billion in the previous quarter. This is the third consecutive quarterly year-on-year decline in revenue for Apple since 2016.

Among them, the sales of the "flagship product" iPhone were 39.67 billion US dollars, a year-on-year decrease of 2.5% and lower than the expected 39.9 billion US dollars. The same period last year saw a nearly 3% year-on-year increase of 40.7 billion US dollars. Smartphones account for 48.5% of total revenue, lower than the 54% in the previous quarter and 52% in the previous year.

Sales of iPhone, Mac, and iPad have all declined

More than half of iPhones rely on promoting sales

Apple's third quarter financial report showed that the company's revenue during the reporting period was $81.8 billion, a decrease of 1.4% year-on-year, but exceeded market expectations of $81.69 billion; The net profit was 19.9 billion US dollars, a year-on-year increase of 2.3%; Diluted earnings per share were $1.26, higher than market expectations of $1.19 per share. The sales of iPhone in the third quarter were 39.67 billion US dollars, lower than the market expectation of 40.2 billion US dollars, a year-on-year decrease of 2.4%.

Apple's next major iPhone upgrade is expected to be launched in September. The company usually releases new hardware products in September every year. Currently, the iPhone accounts for approximately half of Apple's overall sales, compared to nearly two-thirds in 2016.

In addition to the iPhone, both Mac and iPad have also experienced a decline in sales. Specifically, iPad sales decreased by 20% year-on-year, with a total sales revenue of 5.79 billion US dollars. Mac sales decreased significantly by 7.3% year-on-year to $6.84 billion.

Looking at different regions, Apple's revenue in Greater China this fiscal quarter was 15.758 billion US dollars, an increase of 7.9% compared to last year. In contrast, Apple's largest market, the Americas, saw a year-on-year decrease of 5.6% in revenue, while other Asia Pacific regions saw an 8.5% decline in revenue. Apple CEO Cook said that thanks to the push of the iPhone, Apple still maintains strong momentum in emerging markets.

According to data from market research firm Canalys, the global smartphone market decreased by 10% year-on-year in the second quarter of 2023. Among them, Apple's shipment volume was 43 million units, a year-on-year decrease of 13%.

According to media reports, Apple's Chief Financial Officer Luca Maastricht stated that most iPhone sales are currently achieved through some kind of promotional plan, including trade in, installment payments, and other financial consumption methods, with a proportion far exceeding 50%.

In order to sell more iPhones, Apple is even willing to lower the price of iPhones in markets such as China. The price of iPhone 14 has already set "new low prices" on multiple platforms. Meanwhile, the industry predicts that demand for the iPhone 15 series may be lower than that of the 14 series this year.

For example, during this year's 618 shopping festival, there were many discounts offered by Apple on a certain e-commerce platform, including iPhone products. The specific discount methods included shopping vouchers, direct discounts, installment interest free, and VIP coupon stacking.

Maastri also pointed out that Apple's sales in the fourth quarter are expected to perform similarly to the third quarter. If Apple's sales continue to decline year-on-year in the fourth quarter, it will be the longest year-on-year decline in sales for the company in 20 years.

Despite a decline in revenue, Apple's operating costs have also contracted this quarter, from $47.07 billion in the same period last year to $45.38 billion in the current quarter. The main reduction lies in the revenue cost of products, while the revenue cost of service business has slightly increased.

Apple's service sector revenue is rising against the trend. In the third quarter, Apple's service business revenue was $21.21 billion, compared to $19.6 billion in the same period last year. Cook said at the financial report meeting, "Driven by over 1 billion paid subscriptions, our service revenue reached a historic high in the quarter of June."

Nowadays, Apple's positioning is no longer just about hardware sales, but more about combining hardware with the content ecosystem, enhancing user stickiness, and building a more solid Apple ecosystem. Taking its TV products as an example, at the beginning of its launch, Apple TV+became the most expensive hardware accessory in the industry, but with the cheapest subscription price.

Industry observer Hong Shibin pointed out that Apple's move is the only way to find a second growth curve based on its own characteristics. Apple has a superior position on the mobile hardware end, with a huge user base, and every iPhone and iPad in the hands of users is an entrance to the Apple ecosystem. In this way, the hardware and content under Apple's rule complement each other, jointly reinforcing and expanding the Apple ecosystem.

However, experts also point out that in the short term, Apple's service business is difficult to say as a "cure" and cannot provide peace of mind for Apple's operations. For example, as a rising star, Apple TV+, although developing well, still has a relatively small market share compared to "predecessors" such as Netflix. Even if Apple is wealthy, it is difficult to achieve "dimensionality reduction strikes" in the streaming field. Moreover, how its content ecosystem can break through the North American market and spread to other cultural regions around the world is also a question worth pondering.

"I use it every day"

Cook is working on the "Amway" Vision Pro again

As traditional business sectors weaken, new terminals such as headsets that use AI technology have raised high expectations for Apple's performance improvement from the outside world.

During the earnings conference call, Cook promoted his "star product" - the Hybrid Reality Headworn Display Device Vision Pro to everyone. "We are very excited about Vision Pro and look forward to its launch early next year," Cook said in a meeting with analysts

Cook also claimed to be using Apple's MR headset Vision Pro every day. He said that everyone who watched the demonstration, whether it was media personnel, developers, or analysts, was "shocked". The Apple Vision Pro headset will be released to consumers in the United States in early 2024 and will be launched in more countries and regions later next year.

However, Cook also stated, "Today's financial report meeting cannot predict its future earnings situation."

Due to the expected small shipment volume of Apple's first headset Vision Pro in 2024, there has not been a significant performance improvement this time. And Apple CEO Cook did not bring much news about the integration of AI and Apple. At the performance meeting, Cook still did not proactively mention AI, only stating in response to investor questions that Apple has been researching generative artificial intelligence for many years, considering AI and machine learning as fundamental core technologies, almost embedded in every product.

It is reported that Apple is developing an AI tool similar to ChatGPT and a big language model called "Ajax" internally, but so far, this model and its application are still mysterious.

Zhongxin Jingwei Comprehensive Self disclosure Information, Daily Economic News, China Securities News, CCTV, Interface News, Securities Daily, Caixin News, etc