Apple’s latest earnings show the Mac slumping and services soaring

Apple beat Wall Street expectations and said it hit an all-time high in services revenue and set a new record for the March quarter in iPhone revenue in a second-quarter earnings report on Thursday. The numbers show continued demand for the iPhone 14 range, even with significant upgrades (including USB-C connectivity) on the horizon this fall. But Apple’s other businesses, including Mac and iPad, were down year over year.

“We are pleased to report an all-time record for services and a quarterly record for iPhone, and that our installed base of active devices has reached an all-time high, despite the challenging macroeconomic environment,” CEO Tim Cook said in the company’s earnings release. He told CNBC in an interview that unlike other tech heavyweights, which have laid off tens of thousands of employees in recent months, Apple isn’t considering sweeping cuts. “I see this as a last resort, and that’s why we’re not talking about mass layoffs right now,” Cook said.

PC sales have taken a painful slump in recent months, with IDC and Canalys both reporting that global shipments fell about 30 percent in the first quarter of 2023. Apple has been hardest hit of any major brand as consumers continue to cut back on gadget spending following a pandemic boom.

“There are really two reasons for this,” Cook told CNBC when discussing Mac earnings. “One of them is the macro situation in general. And on the other hand, we’re still comparing the very difficult comparison of the M1 MacBook Pro 14 and 16 inches from last year’s quarter.” These MacBooks came with all-new designs, while the M2-based revisions were just a spec upgrade.

The company is rumored to be unveiling a 15-inch MacBook Air and other devices in the coming weeks, which could give Mac sales a much-needed boost. iPad sales fell 13 percent compared to the year-ago quarter, and Apple’s wearables category fell 1 percent.

Apple kicks off its annual developer conference in early June and is expected to unveil the latest major releases of iOS, iPadOS, macOS, wearOS and tvOS. But more importantly, the WWDC keynote marks the debut of Apple’s long-awaited mixed reality headset. As the first new major hardware category for Apple since the Apple Watch, the high-tech headset is rumored to have advanced eye and hand tracking, add support for many existing apps, and sell for over $3,000 could become.