Let us take a closer look at Apple's recent earnings ~ is this all good news? (13May2023)

Here are some of the news extracts pertaining to Apple’s recent earnings:

From the various news headlines, most of the news points to good outcomes from the recent earnings. The only one is CNN which is not positive about the earnings.

Taking a quick glance, most of us will walk away thinking that the earnings will be stellar. Yes, the earnings are very good.

Observations from the earnings (based on 6 months ending 01 Apr 2023):

• Total net sales are $211.9B
• Total net income is $54.1B
• Both sales and EPS have beaten the market Forecast.
• EPS came out to be 1.52 compared to a forecast of 1.43
• Revenue came out to be 94.8B compared to a forecast of 92.9B

Any company will want to have a net income of $54B (after 6 months).

However, there are also some notable observations too (based on the period of 6 months, a year ago):

• Total net sales are lower - $211.9B compared to $221.2B a year ago (4.2%)
• Total net income is lower - $54.1B compared to $59.6B a year ago (9.2%)
• There is a drop of $9.3B (net sales)
• There is a drop of $5.5B (net income)
• EPS (basic) came out to be lower at 3.42 compared to 3.65 a year ago.
• The only region with growing net sales is the Rest of Asia. The other regions of the Americas, Europe, Greater China and Japan have clocked declining net sales.
• Though the net sales fell by 4.2%, the net income fell by 9.2%. The net income is dropping more than the decline in net sales.

There could be a declining trend for both revenue and net income. What we need to understand better. We are trying to understand whether the decline is due to:

• Apple’s offerings
• Macro ~ global demand
• A mix of both

Let us go beyond the news headline and look into the financial statements in detail. This is part of the due diligence that we should exercise.