Despite a huge EU tax back payment and a weakness in its China business, the technology group Apple is earning billions. Apple's most important product, the iPhone, continues to sell well.
The sales success of the new generation of smartphones gave Apple strong quarterly results. The iPhone 16, which was introduced in September, has so far sold better than the previous generation in the same period last year, said CEO Tim Cook. “We're off to a good start.”
With the launch of the new model in the final weeks of the quarter, iPhone sales rose by 5.5 percent to $46.2 billion – sales increased in all regions of the world, said CFO Luca Maestri.
The iPhone is by far the most important product for Apple. Sales in the Mac computer and iPad tablet business also increased. Overall, Apple's sales rose by six percent year-on-year to $94.9 billion. That's more than analysts expected.
Weakness in China
Total sales in the China region fell slightly to $15 billion. Apple suffers from tough local competition there. Huawei in particular is making life difficult for the US company with its technically high-quality products. There is a risk that this downward trend will continue for some time, said analyst Tom Forte from the investment bank Maxim. Everything depends on when the new AI functions called “Apple Intelligence” will be available in this important market.
Unlike other providers, Apple does not bundle its AI in separate software, but rather weaves this technology into its operating system in the form of new functions. Their introduction will take place gradually. That's why experts fear that some users will delay switching to the new iPhone generation. For example, European users have to be patient until possible incompatibilities between Apple AI and local technology laws are clarified.
Tax back payment shrinks profits
The bottom line is that Apple earned $14.7 billion in the last quarter. In the same quarter last year it was almost $23 billion. A back tax payment in Ireland pushed quarterly earnings down by $10.2 billion, CFO Maestri said. Apple lost the year-long case against the EU Commission in September. The total amount involved was more than $14 billion.
