Apple Inc.’s (NASDAQ:AAPL) forthcoming fourth-quarter financial results for 2023, set to be unveiled on November 2, are expected to bear the brunt of sluggish sales in the Mac and iPad categories, as well as a slowdown in the Services sector.
Apple is forecasting substantial double-digit revenue drops in both Mac and iPad sales compared to the previous year for the upcoming quarter.
According to our model, projected revenues for the Mac and iPad in the fiscal fourth quarter are estimated to be $7.88 billion and $5.82 billion, reflecting year-over-year declines of 31.5% and 18.8%, respectively.
We anticipate shipments of approximately 6 million Mac units and 14.3 million iPad units for this period.
The Mac category is likely to experience a downturn due to weakened demand for personal computers. Gartner’s most recent report reveals that in the third quarter of 2023 (ending in September), the PC market saw a 9% decline in shipments compared to the same period the previous year, with a total of 64.279 million PCs shipped.
Shipments from major players like Apple, Lenovo, and Dell Technologies saw declines of 24.2%, 4.4%, and 14.2%, respectively. The only vendor on the list to experience growth was HP, with a 6.4% increase in shipments.
Lenovo maintained its leading position in the market with a 25.1% market share, followed by HP at 21%. Dell secured a market share of 16.1% in the third quarter of 2023.
Apple’s market share dropped from 11.7% in the third quarter of 2022 to 9.7% in the third quarter of 2023.
In fact, Apple’s non-iPhone portfolio, encompassing Mac, iPad, and Wearables, is expected to have contracted in the fiscal fourth quarter.
Our model forecasts a 4.7% year-over-year decline in Wearables, Home & Accessories revenues, estimating them at $9.2 billion.
Slowing Momentum in Services Raises Concerns
Apple’s growing reliance on the Services sector for revenue growth has raised concerns. This segment, which includes income generated from the App Store, Apple Music, iCloud, Apple Arcade, Apple TV+, Apple News+, and Apple Card, contributed to 25.9% of the company’s sales in the third quarter of fiscal 2023.
While Apple’s core business centers around its flagship iPhone, the Services category has emerged as a significant revenue generator for the company.
At the close of the fiscal third quarter, Apple boasted over 1 billion paid subscribers across its Services offerings, a number expected to increase in the upcoming quarter. This growth is attributed to the expanding user base of Apple’s devices and the popularity of apps such as Apple TV+.
Apple anticipates an acceleration in Services revenue growth compared to the June quarter. Services revenues saw an 8.2% year-over-year increase, reaching $21.21 billion in the fiscal third quarter.
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