Analysts expect tech giant company Apple to post its first year-over-year revenue decline since 2019’s March quarter when it reports earnings on Thursday.
The iPhone maker is expected to post quarterly earnings of $1.94 per share in its upcoming report, which represents a year-over-year change of 7.6%. Revenues are expected to be $121.21 billion, down 2.2% from the year-ago quarter.
These analysts predict that Apple will post a decline in earnings on lower revenues, due to the fact that the company faced disruptions in one of its biggest factories (Foxconn) in China, which was rocked by violent protests by employees over pay and conditions.
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The rare worker unrest came after employees took to social media to air their grievances over what appeared to be a delay in bonus payments.
Taiwanese firm Foxconn later apologized for what it called a “technical error” which caused a discrepancy in pay from what was promised to staff.
The company said in a statement: “At present, the park is continuing to actively communicate with the employees affected by the wrong information, explaining that the salaries and bonuses of all employees are paid in accordance with company policies”.
Foxconn’s factory was also negatively impacted by a Covid-19 outbreak that led to workers fleeing the facility as the company moved to control the outbreak through isolating infected people.
Following the upheavals that rocked the company, it couldn’t build enough of its high-end iPhones when its primary assembly facility in China was shut down for weeks during Covid lockdowns, as it is now trying to make up for a shortfall in staff that is threatening the global iPhone supply.
Analysts estimate that the Zhengzhou factory accounts for more than 70% of Apple’s global iPhone production, highlighting the Cupertino-based giant’s reliance on China as a manufacturing hub.
They disclosed that the protests that rocked the company, will likely have a negative impact on Apple’s revenue.
Also, analysts at Evercore ISI stated that iPhone demand could be affected by 5 million to 8 million units in the December quarter, mostly at the high-end of Apple’s smartphone range, which would negatively impact revenue by $5 billion to $8 billion.
This spurred the tech giant to issue a rare warning to investors, explaining that production issues would result in lower shipments than previously anticipated.
Meanwhile, in a recent publication on Tekedia, Apple Scored the Biggest Quarterly Market Share in China, despite Covid 19 disruptions and the recent economic downturn.
According to Counterpoint research data, Apple accounted for nearly 24 percent of China’s smartphone sales in the last three months of 2022.
Meanwhile, the company saw lower demand for its latest generation of iPhones than it had projected earlier this year.