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The Greatest Sales Decline In 22 Years Pushes Apple's Shares Below Its Top Tech Peers In 2023

The Greatest Sales Decline In 22 Years Pushes Apple's Shares Below Its Top Tech Peers In 2023
Although Apple's stock experienced a surge in 2023, the company's revenue declined for four consecutive quarters, a performance that was eclipsed by all of its mega-cap tech competitors. Since the 2001 dot-com bust, this is Apple's longest slide of its kind.
A portion of Apple's issues this year were brought on by a challenging computer and phone market. Sales of smartphones as a whole declined during the summer, the lowest level in over ten years.
However, Apple also addressed a few business-specific problems. The first time that has occurred in a calendar year since the iPad's 2010 introduction, Apple did not produce new models in 2023. Apple would have little to advertise without new models, and official price reductions for older models would not increase sales.
Morgan Stanley analysts claimed earlier this month that all iPad models currently in production were delivering from Apple's website in less than a day. That indicates a lack of demand because Apple cannot keep up with demand for its hottest products and cannot fulfil orders fast enough.
The September fiscal year 2023 saw a 3.4% decline in iPad revenue to $28.3 billion for Apple. iPad sales were considerably worse on a unit basis, declining by 15%, based on a recent estimate from Wamsi Mohan, an analyst at Bank of America. Apple does not release sales figures.
Worse, a conflict over intellectual property led to the removal of new Apple Watch models from US Apple stores a few days before Christmas.
The gadgets were put back on store shelves following an appeal in late December, but Morgan Stanley analysts calculate that Apple lost roughly $135 million in sales every day while the ban was in place.
Customers were less inclined to part with their cash for gadgets with modest improvements, even for Apple's new offerings, such as Mac computers. In fiscal 2023, sales of Mac computers and laptops decreased by over 27% to $10.2 billion. According to an estimate from Bank of America, unit sales fell by 11%.
As of Thursday's close, Apple shares had still increased 49% year over year, outpacing the Nasdaq's 44% gain. Investors would have been better served placing their money on any of the other highest-valued tech firms, though.
This year, Meta's value increased by about 200% and Nvidia's shares more than tripled. Alphabet surged 59%, Microsoft gained 57%, Amazon soared 83%, and Tesla's shares more than doubled.
Apple needs some new goods to hit the market and a rebound in the demand for laptops and smartphones throughout the world in order to sustain its $3 trillion market capitalization and revenue growth.
When Apple's first mixed-reality headset, the $3,499 Vision Pro, goes on sale early in the following year, it will be a significant test.
“We believe success with the Vision Pro is less about 2024 and more about its longer-term potential,” Morgan Stanley analyst Erik Woodring wrote in a note this month.
According to a projection by UBS analyst David Vogt, Vision Pro revenue might reach roughly $1.4 billion in the upcoming year, assuming Apple supplies 400,000 headsets. It was "relatively immaterial," as he put it.
The secret will be enthusiasm. The Vision Pro, which will be available through Apple stores, is the company's first entirely new product since the release of the Apple Watch. The headgear might increase foot traffic and interest in Apple's current line of devices. Additionally, there's a potential that it gains enough traction to demonstrate Apple's superiority in terms of computing's future.
In terms of international relations, Apple hopes to see less hostility between the United States and China.
Apple made great strides in 2023 to diversify its production locations by moving them from the Chinese mainland to nations like Vietnam and India. However, it seems that Apple's efforts to broaden its supply chain have sparked a desire on the part of the Chinese authorities to label the firm as foreign. Reports that employees of Chinese government agencies were instructed not to carry iPhones to work were referred to as "retaliation" by the White House.
The Chinese authorities have refuted them. However, analysts are beginning to fear that Chinese demand is slowing down, particularly in the current quarter for iPhones. With the iPhone still making up around half of all hardware sales for the company, it continues to be Apple's most significant product.
“Heading into the holiday season, iPhone unit demand remains the key near-term debate amidst macro woes and concerns around potential share loss in China on the resurgence of Huawei,” Citi analyst Atif Malik wrote in a note this month.
Apple is still a massive company in spite of its difficulties. In the fiscal year 2023, the corporation brought in $383 billion in sales and made approximately $97 billion in net profits.
In certain nations, Apple increased its market share while its competitors witnessed more drastic drops, as the markets for smartphones and PCs were contracting. When Apple announced in February that it had 2 billion devices in use, investors took note. This statistic is seen as a leading indicator of future software and service sales.
Bloomberg claims that Apple is planning new iPads for release in the upcoming year, which would increase demand. The company intends to resolve the intellectual property dispute that temporarily prohibited sales by submitting a software update for its watches to the US authorities.
Thanks in part to import limitations on semiconductors and chip equipment, iPhones continue to outperform Huawei's latest devices in terms of speed.
Apple's largest quarter of the year, the December quarter, will be flat compared to previous year, according to CFO Luca Maestri's remarks in November. He issued a sales warning for iPads, Wearables, and Macs.
Analyst predictions, however, indicate that the overall sales decreases are now in the past, with modest increase anticipated in the first half of the year and a pick-up in the second half.
“Overall, the downturn appears to be over, and we believe it is time to see mild growth,” Bank of America analyst Simon Woo wrote in a report this month.

Christopher J. Mitchell

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