# Apple heads for largest Q3 revenue drop since 2016 as iPhone sales slow Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-08-02 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Apple Q3 revenue drop in slow iPhone sales Meta Description: As iPhone sales slow, Apple must highlight use of AI for growth amid forecasted 1.6% dip in revenue, analysts say. Potential boost in July-Sept. URL: https://financedigest.com/apple-heads-for-largest-q3-revenue-drop-since-2016-as-iphone-sales-slowhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-08-01t195336z1lynxmpej701q2rtroptp4apple-iphone-usa-1736813703668-compressed.jpg) # Apple heads for largest Q3 revenue drop since 2016 as iPhone sales slow By Yuvraj Malik (Reuters) – Apple is likely to report a dip in iPhone sales in the April-June quarter as shoppers held out for a new model in a slow economy, making it important for the company to detail how it is using artificial intelligence to augment growth, analysts said. The world’s most valuable firm will wrap up Big Tech earnings on Thursday, with a likely 1.6% drop in total quarterly revenue, according to Refinitiv – its steepest drop in third-quarter revenue since 2016. IPhone sales likely fell more than 2% in the period, according to 24 analysts polled by Visible Alpha, compared with a near 3% increase a [year earlier](https://www.financedigest.com/naturgys-profit-rises-on-lng-gains-soothing-shareholders-by-pietro-lombardi-madrid-reuters-spanish-power-utility-naturgy-reported-on-monday-an-88-jump-in-profit-for-the-first-six-months-of.html "Naturgy’s profit rises on LNG gains, soothing shareholders By Pietro Lombardi MADRID (Reuters) – Spanish power utility Naturgy reported on Monday an 88% jump in profit for the first six months of the year, boosted by strong earnings at its liquefied natural gas (LNG) business, which could help it to win over restive investors. Earlier this month, the company said it would increase its dividend floor through 2025 while trimming expected investment, as it sought to make rewarding shareholders a priority. Pleasing them has become a focus as Naturgy considers changes that could reshape the company and after arguments over the potential appointment of a chief executive. Naturgy’s first-half net profit jumped to 1.05 billion euros (.16 billion), boosted by its liquefied natural gas (LNG) business. Shares were down 0.2% in mid-morning trading, bucking deeper declines, in particular for Spain’s blue-chip banks and utilities after a general election on Sunday produced no clear winner. Renta 4 Banco analyst Angel Perez Llamazares said Naturgy performed better than expected, adding “cash flows also beat our expectation,” and debt fell more than expected. After natural gas prices hit record levels last year, Naturgy said a fall in procurement costs this year and hedging gains had boosed profits. In the first half of the year, the company “exceeded the objectives of operating efficiency, cash generation, investment materialisation and debt reduction,” Executive Chairman and CEO Francisco Reynes said. After rival Iberdrola named a separate CEO last year, Naturgy is the only large energy company in Spain to combine the roles of executive chairman and CEO. Earlier this month, the company raised the dividend floor to 1.40 euros a share, from 1.20 euros. Operating profit (earnings before interest, tax, depreciation and amortisation) is expected to reach 5.1 billion euros, compared with a previous guidance of 4.8 billion euros. It said it was targeting net profit of 1.8 billion euros in 2025. Naturgy also relaunched its plan to split regulated infrastructure operations and liberalised energy businesses into two listed companies. The project had been suspended after the Ukraine war disrupted energy markets and analysts are still sceptical. “We believe it is unlikely that Naturgy will be able to implement its asset split in the short term and it is also unlikely that a big change in the shareholding of the company would occur,” said RBC analyst Fernando Garcia. ( = 0.8986 euros) (Reporting by Pietro Lombardi, editing by Inti Landauro and Barbara Lewis)") and a 1.5% rise in the quarter ended March. The quarterly report could mark a break from an upbeat earnings season for the likes of Meta Platforms, Alphabet and Microsoft that have shown resilience in their cloud [businesses and an uptick in digital](https://www.financedigest.com/the-digital-transformation-of-tax-filing-how-e-filing-revolutionizes-business-taxes.html "The Digital Transformation of Tax Filing: How E-Filing Revolutionizes Business Taxes") ad sales. Apple is not immune to general macroeconomic [trends and will continue to set](https://www.financedigest.com/top-10-fintech-trends-set-to-take-off-in-2022.html "Top 10 Fintech Trends Set To Take Off In 2022") the pace (for the smartphone industry) for quite some time,” said Bob O’Donnell, founder of TECHnalysis Research. With details about the new iPhone 15 expected next month – which could sport the more universally accepted USB-C port on some models – iPhone [sales](https://www.financedigest.com/food-group-danone-raises-2022-outlook-as-third-quarter-sales-beat-expectations.html "Food group Danone raises 2022 outlook as third-quarter sales beat expectations") could get a small nudge in the July-September quarter, said analysts, who predicted a mixed bag of results for the period. Apple traditionally does not provide quarterly outlook, but analysts expect the company may elaborate how it is using AI to [improve](https://www.financedigest.com/demand-for-meatless-products-and-vegetable-proteins-is-expected-to-improve-nutritional-yeast-market-sale.html "Demand For Meatless Products And Vegetable Proteins Is Expected To Improve Nutritional Yeast Market Sale") its upcoming products. The company has so far avoided buzzwords like AI at its events, in a contrast with [tech giants including Alphabet and Microsoft](https://www.financedigest.com/microsoft-to-shed-10000-jobs-adding-to-glut-of-tech-layoffs.html "Microsoft to shed 10,000 jobs, adding to glut of tech layoffs"). Last month, [Bloomberg News reported Apple](https://www.financedigest.com/apple-may-add-touch-screens-to-mac-computers-bloomberg-news.html "Apple may add touch screens to Mac computers – Bloomberg News") has quietly built its own framework to create large language models known as “Ajax. We expect Apple’s updated comments on its AI aspirations to be a focus,” analysts at Well Fargo wrote in a research note, adding that any commentary around the technology could [boost the stock](https://www.financedigest.com/energy-stocks-boost-european-shares-ahead-of-ecb-minutes.html "Energy stocks boost European shares ahead of ECB minutes"). Apple’s [shares have gained](https://www.financedigest.com/european-shares-gain-on-boost-from-kering-uk-stocks-shine.html "European shares gain on boost from Kering; UK stocks shine") more than 50% so far this year, compared with a nearly 37% increase in the tech-heavy Nasdaq Composite. ## IPHONE SLOWDOWN Much of the weakness in iPhone [sales is expected](https://www.financedigest.com/u-s-automotive-and-aircraft-interior-genuine-leather-aftermarket-is-expected-to-push-sales-at-3-6-cagr-with-the-market-valuation-reaching-us-11-1-bn-in-2031.html "U.S. Automotive and Aircraft Interior Genuine Leather Aftermarket is expected to push sales at 3.6% CAGR, with the market valuation reaching US$ 11.1 Bn in 2031") to come from the Americas, where revenue is set to fall 6%, analysts said. Sales from [China – Apple’s third-largest market](https://www.financedigest.com/world-shares-rally-as-china-offers-markets-a-hand.html "World shares rally as China offers markets a hand") – are expected to be flat due to an uneven economic recovery, though the company has fared better than Android rivals in the country. Overall smartphone shipments to China declined 2.1% in the second quarter, according to [market research](https://www.financedigest.com/bacillus-coagulans-market-research-report-2022-global-forecast-till-2028.html "Bacillus Coagulans Market Research Report 2022 – Global Forecast till 2028") firm International Data Corp. Most investors feel a soft China could pose a risk to the numbers and further commentary, but [Apple’s position in China](https://www.financedigest.com/apple-opens-store-on-chinas-wechat-platform.html "Apple opens store on China’s WeChat platform") is on a solid footing and the company is likely to see only a small, if any, decline in iPhone sales,” Piper Sandler analysts said. If there is any sales [weakness from China](https://www.financedigest.com/asian-markets-down-dollar-up-after-weak-china-trade-data.html "Asian markets down, dollar up after weak China trade data"), it is likely to be easily offset by strong sales momentum in India,” they added. Mac and iPad sales are [expected to fall](https://www.financedigest.com/analysis-china-property-financing-tweaks-fall-short-of-investor-expectations.html "Analysis-China property financing tweaks fall short of investor expectations") by 10.6% and 11.2%, respectively, according to Refinitiv data. But the services business – home to [Apple’s App Store](https://www.financedigest.com/apple-must-ease-app-store-rules-u-s-judge-orders-in-a-blow-to-iphone-maker.html "Apple must ease App Store rules, U.S. judge orders, in a blow to iPhone maker") and audio and video streaming services – could be a bright spot thanks to an uptick in the ad market, some analysts said. The business, which accounts for roughly a [quarter of Apple’s total revenue](https://www.financedigest.com/oracle-beats-quarterly-revenue-estimates-on-cloud-services-demand.html "Oracle beats quarterly revenue estimates on cloud services demand"), is expected to grow 5.7% as it also benefits from price increases for iCloud subscriptions, though the pace is broadly similar to that in the preceding three quarters. (Reporting by Yuvraj Malik in Bengaluru; Editing by Sayantani Ghosh and Maju Samuel) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---