By Swissquote Analysts
Apple iPhone Sales Remain Resilient as Company Reports 11% Decline in Profit
Topic of the day
Apple Inc. reported an almost 11% decline in profit after weathering supply constraints and shutdowns in China, although iPhone sales continued to grow, remaining resilient despite economic challenges. The better-than-expected results for the quarter ended in June followed a pattern of tech companies that posted a drop in profits but managed to assuage investor concerns about their strength in uncertain economic times. Investors were encouraged by Apple’s results even as they continue to pay close attention to the potential effect of a strong dollar, inflationary fears, chip shortages and Covid-19 precautions in China. Apple shares rose by more than 3% in after-hours trading. Apple on Thursday reported that profit fell to $19.4 billion, the worst quarter since the July-through-September period in 2020 ahead of the 5G-capable iPhone launch. On a per share basis, the Cupertino, Calif., company’s profit fell to $1.20 from $1.30 a year earlier. Analysts surveyed by FactSet, on average, predicted earnings per share of $1.16. Revenue rose 1.87% to a new fiscal third-quarter record of about $83 billion from $81 billion a year ago. Analysts had predicted a 1.7% rise. IPhone sales, which are Apple’s biggest driver of revenue, rose 2.8% to a fiscal third-quarter record of $40.67 billion, while analysts had expected a 2.5% drop. Sales of iPad tablets, Mac computers and wearables were affected by supply constraints, Mr. Cook said. Apple rival Samsung Electronics Co., the world’s biggest maker of semiconductors, smartphones and televisions, on Thursday lowered expectations for industrywide smartphones this year.
Thursday, the SMI gained 0.7 per cent to 11,129 points. Among the 20 SMI stocks, there were 15 price gainers and five price losers. 40.75 (previously: 46.84) million shares were traded. Nestle (-0.4%) earned less in the first half of the year despite rising sales. The food and beverage giant raised its full-year organic sales growth forecast upon presenting its interim results but is becoming slightly more cautious on margin expectations. Heavyweight Roche (-0.4%) also slowed the market, while Novartis (+0.3%) edged higher. Credit Suisse extended its gains from the previous day and added 3.4 per cent. Here, news on the restructuring of the bank and future strategic focus as well as the reduction of the cost base had supported. In addition, the resignation of CEO Thomas Gottstein had been announced. The share price of competitor UBS increased by 2.3 per cent. In the financial sector, Partners Group advanced by 5.3 per cent.
The European stock markets ended higher on Thursday, buoyed by a sharp easing of rates on the bond market at the end of a session marked by very busy news on the macroeconomic side as well as on the corporate results front. The Stoxx Europe 600 index rose 1.1% to 432.8 points. In Paris, the CAC 40 and the SBF 120 gained 1.3% each. The DAX 40 in Frankfurt increased by 0.9%. Only the FTSE 100 in London closed very slightly down (-0.04%), penalised in particular by the decline in Barclays (-4.6%) after the bank published disappointing quarterly results. Ipsen (+16.2%) raised its targets for 2022 following the publication of half-yearly results that exceeded analysts' expectations. Verallia (+9.9%) lifted its adjusted gross operating profit (Ebitda) target for 2022 as its results rose sharply in the first six months of the year, driven by higher sales volumes and prices. Maisons du Monde (+8.6%) confirmed its financial targets for 2022 "despite a difficult environment". JCDecaux (-11.8%) reported a third quarter outlook that JPMorgan deemed "disappointing". Accor (-11.7%) disclosed a disappointing EBITDA target for 2022, according to Bernstein. Nexity (-11%) revealed a 17% decline in operating profit from ordinary activities (OPEX) in the first half of the year compared to the corresponding period in 2021. At the same time, its revenue fell by 5%. AB InBev (-4.1% in Brussels) reported a decline in net profit for the second quarter.
Stocks climbed Thursday, despite fresh data showing the U.S. economy contracted for a second straight quarter. The S&P 500 added 48.82 points, or 1.2%, to 4072.43, building on its strong gains from the prior session. The broad market index closed sharply higher Wednesday after the Federal Reserve raised interest rates and Chairman Jerome Powell hinted that the pace of rate rises would eventually slow. The Dow Jones Industrial Average added 332.04 points, or 1%, to 32529.63. The technology-heavy Nasdaq Composite Index gained 130.17 points, or 1.1%, to 12162.59. The U.S. economy shrank at a 0.9% annual rate last quarter, marking a second straight quarterly decline in gross domestic product, the Commerce Department said Thursday. The data intensified debate among analysts and investors about whether the economy is in a recession. Investors have been looking to earnings results from major blue-chip and technology companies for further guidance about the state of the economy. After markets closed, Amazon. com reported another quarterly loss but said it is making progress controlling costs, pushing its shares up 12% in late trading. Apple shares rose 2.8% after the company reported iPhone sales continued to grow despite the economic headwinds. But Intel slumped 8.9% after posting a surprise quarterly loss and cutting its outlook amid a slump in personal-computer purchases and product delays. During market trading, shares of Facebook parent Meta Platforms fell $8.86, or 5.2%, to $160.72 after reporting its first-ever decline in quarterly revenue. Qualcomm dropped $6.97, or 4.5%, to $146.45 after issuing a muted sales outlook. Ford jumped 81 cents, or 6.1%, to $14 after reporting a 50% rise in revenue. Spirit Airlines climbed $1.36, or 5.6%, to $25.66 after JetBlue Airways agreed to buy the carrier. The deal came after The Wall Street Journal reported that the two sides were close to sealing an agreement following a monthslong bidding war between JetBlue and Frontier Group Holdings. JetBlue dropped 3 cents, or 0.4%, to $8.37.
In Asia, major indexes broadly closed mixed on Friday. After a subdued start, a sharp drop of over 2 per cent in Hong Kong stands out. This was due in particular to the weak performance of the technology sector. Among the individual stocks, Alibaba Health Information Technology fell by 7 per cent and Alibaba Group by almost 6 per cent. In addition, Meituan lost 5.2 per cent after regulators recently called for stricter safety controls here and at other food delivery services. Shanghai also declined by 0.7 per cent, while Tokyo edged 0.2 per cent lower to 27,758 points.
U.S. government debt yields fell sharply Thursday after data showing the U.S. economy contracted in the second quarter heightened recession fears and reinforced ideas the Federal Reserve may slow the pace of rate increases a day after the central bank delivered another outsize hike. The 10-year Treasury note decreased by 6 basis points to 2.672%. The 2-year Treasury note slipped by nearly 10 basis points to 2.873%.
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