Apple’s (AAPL – Free Report) fourth-quarter fiscal 2023 results, to be reported on Nov 2, are expected to reflect the impacts of the sluggishness in the Mac and iPad shipments, as well as slowing momentum in the Services business.
Apple expects revenues for both Mac and iPad to decline double digits on a year-over-year basis in the to-be-reported quarter.
Our model estimates for fiscal fourth-quarter Mac and iPad revenues are pegged at $7.88 billion and $5.82 billion, indicating 31.5% and 18.8% year-over-year decline, respectively.
We estimate Mac and iPad shipments of roughly 6 million and 14.3 million, respectively.
Mac revenues are expected to have suffered from weak PC demand. Per Gartner’s latest report, 64.279 million PCs were shipped in the third quarter (September-end) of 2023, down 9% from the year-ago period.
Shipments from Apple, Lenovo (LNVGY – Free Report) and Dell Technologies (DELL – Free Report) declined 24.2%, 4.4% and 14.2%, respectively. HP’s (HPQ – Free Report) shipment grew 6.4%, the only vendor in the list to witness growth.
Overall, Lenovo remained the top vendor, with a market share of 25.1%. HP holds the second spot, with a market share of 21% in worldwide PC shipments. Dell’s market share was 16.1% in the third quarter of 2023.
Apple’s market share decreased from 11.7% in third-quarter 2022 to 9.7% in third-quarter 2023.
In fact, Apple’s non-iPhone portfolio, which comprises Mac, iPad and Wearables, is expected to have declined in the fiscal fourth quarter.
Our model estimates Wearables, Home & Accessories revenues of $9.2 billion, suggesting a 4.7% year-over-year decline.
Click here to know how Apple’s overall fiscal fourth-quarter results are likely to be.
Slowing Momentum at Services Key Concern
Apple’s growing dependence on Services business for growth is a concern. The segment, which includes revenues from the App Store, Apple Music, iCloud, Apple Arcade, Apple TV+, Apple News+ and Apple Card, accounted for 25.9% of sales in third-quarter fiscal 2023.
Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as the company’s new cash cow.
Apple had more than 1 billion paid subscribers across its Services portfolio at the end of the fiscal third quarter. This is expected to have increased in the to-be-reported quarter, thanks to the growing installed base of Apple’s devices, as well as the popularity of apps like Apple TV+.
This Zacks Rank #3 (Hold) company expects Services revenue growth to accelerate compared with the June quarter. Services revenues grew 8.2% year over year to $21.21 billion in the fiscal third quarter. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our model estimates for Services revenues are pegged at $20.39 billion, indicating 6.3% year-over-year growth.
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