Despite a slowing global economy, Apple expects to sustain iPhone sales in 2022 and beyond. It increased its sales target to 90 million units by 2021. However, despite the optimism, the company is expected to face tough economic times and may need to curtail its spending in the future. As a result, its spending plans for 2022 and 2023 may be reduced, as expected.
Apple’s operating margins rose by a remarkable 220 basis points year over year to about 30.1%
Apple reported a record quarter for Q4 FY’22. Revenues rose by 11% to $123.9 billion, despite a chip shortage that Apple warned would hurt holiday sales. Sales of iPhones grew 9% to $71.6 billion. Sales of the new iPhone 13 were the largest segment, while Macs grew nearly 25%, helped by the launch of high-end MacBook Pro laptops. Apple also continued its trend of work from home.
Apple’s iPhone sales target increased to 90 million units in 2021
The iPhone is expected to be the main driver of Apple’s sales in the second half of this year. While Macs and wearables performed below expectations, Services stayed close to projections. Apple’s sales growth isn’t being affected by the macroeconomic environment, which analysts at Piper Sandler attributed to the strong performance of its two flagship products. Nonetheless, the company’s sales growth may be impacted by issues related to hygiene.
Demand for smartphones is expected to fall due to an economic decline
The global smartphone market is expected to shrink by more than three per cent this year, mainly because of the effects of macroeconomic factors. Last year, the market grew at a four-per-cent clip, to a record 1.39 billion units. According to Counterpoint Research, the supply situation is expected to improve in 2022, but the economic slowdown in China and the Ukraine has already dampened the outlook for the global smartphone market.
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Apple’s dependence on its Services business
Apple has been working to boost its Services business in order to generate more revenue. Previously, it has increased product prices, but that was only a short-term solution. In the past six to seven years, the company has introduced several new services. One of these is Apple Music. Both Apple Music subscriptions provide a revenue stream for Apple. In addition to the iPhone and iPad, the company offers Apple Music.
Tim Cook’s subdued event
Apple’s CEO Tim Cook seemed under the weather Tuesday. He spoke in a low tone and sniffed while speaking, as if he were surrounded by a cough drop or lozenge. That’s no surprise since Cook is a wily fellow who has often been found witty in his responses to financial analysts’ questions. But what was the main reason for the subdued event?