Apple is slogging toward a mediocre milestone not seen in 22 years

Apple Inc. executives historically have talked up the company’s many revenue records, but now the smartphone giant is heading toward a milestone that’s not the type investors should be excited about.

The tech giant just racked up its third consecutive quarter of revenue declines and hinted it could be on pace for a fourth. Were Apple

to post four consecutive quarters of declining sales, it would clinch an “achievement” of sorts not seen since 2001, according to Dow Jones Market Data.

Apple’s fiscal third-quarter results Thursday showed that the macroeconomy continues to affect consumer spending — and sales of iPhones, Macs and iPads aren’t immune. Even though the company recorded a surprise revenue increase in China, overall iPhone sales fell more than 2% to $39.7 billion, and total revenue was off 1%.

The star of Apple’s business was its services segment, which includes many elements of recurring revenue. Services posted an 8% jump in revenue during the June quarter, while topping analysts’ expectations.

Apple no longer gives traditional financial guidance alongside its earnings, but executives indicated that overall performance for the September quarter may not be too different from performance in the June quarter. That could have come as a slight surprise to Wall Street, as analysts had been projecting essentially flat year-over-year revenue for the September quarter, while June-quarter revenue was off by 1%.

“We expect our September-quarter year-over-year revenue performance to be similar to the June quarter, assuming that the macroeconomic outlook doesn’t worsen from what we are projecting today for the current quarter,” Chief Financial Officer Luca Maestri told analysts. He said both iPhone and services revenue are expected to accelerate in the September quarter, but that growth will be offset by double-digit revenue declines in the Mac and iPad.

The Mac business in particular faces tough comparisons, according to Maestri.

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With Apple expected to begin shipping its newest smartphone, the iPhone 15, sometime in the September quarter, some on Wall Street appeared disappointed that the newest iPhone may not compensate for a big drop in the Mac business. Apple shares fell 2% in after-hours trading.

“We think investors will question the sub-seasonal growth implied in the September quarter as a concern, given macro worries into a new iPhone launch,” said Amit Daryanani, an Evercore ISI analyst, in a note to clients late Thursday.

He has a more positive outlook, however, adding that iPhone demand is likely going to be robust. Supply could end up being a bigger driver of sales performance than demand, in his view — at least in the September quarter and perhaps into the December period as well.

Dan Ives, a Wedbush Securities analyst, told MarketWatch there are a lot of moving parts with Apple’s forecast.

“The reality is that iPhone and services were at least as strong as the Street was expecting for the September quarter, and the offsets are iPads and Macs, which are down double-digits,” he said.

While there’s been some debate on Wall Street about whether Apple will have to push the iPhone 15 launch into October, Ives believes the iPhone 15 will indeed be available in mid-September and that iPhone revenue will fall in the low- to-mid-$40 billion range. The FactSet consensus for September-quarter iPhone revenue is currently $44.4 billion.

While investors were hoping Apple’s fiscal 2023 would be another one for the record books, the year is shaping up to be one Wall Street is unlikely to want to commemorate.

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