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Apple set for big sales decline as investors await AI in iPhones

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Apple’s (AAPL.O), opens new tab plan to add generative AI to its iPhones and revive sagging sales in the crucial Chinese market will be in focus on Thursday, when the tech giant is expected to report its biggest quarterly revenue decline in more than a year, Reuters reported.

Long considered a must-own stock on Wall Street, Apple shares have underperformed other Big Tech companies in recent months, falling more than 10% this year as fears mount about its slow roll-out of artificial intelligence services and as a resurgent Huawei (HWT.UL) takes market share in China.

Analysts on average see iPhone sales, which account for about half of Apple’s revenue, falling 10.4% in the first three months of 2024, according to LSEG. That drop would be the steepest in more than three years.

The year-ago iPhone revenue that the 10.4% iPhone sales drop is measured against was unusually high as Apple satisfied pent-up demand after the COVID pandemic, company executives previously noted.

At least $5 billion of the $51.3 billion in iPhone sales a year ago was essentially catching up from disruptions in the December 2022 quarter when COVID lockdowns in China hampered iPhone production, executives said.

Even with that factored in, Wall Street expects a slight decline in iPhone sales, and analysts estimate Apple’s total revenue declined 5% in its fiscal second quarter ended in March. That would be Apple’s biggest revenue decline since the December 2022 quarter, when revenue fell 5.5%, read the report.

Apple earlier this year lost the crown of the world’s most valuable company to Microsoft (MSFT.O), opens new tab. Its market value stands at $2.68 trillion after the share price declined 11.24% so far this year.

Weak revenue and falling shares have pressured Apple to spruce up its flagship device after years without major upgrades.

The company is in talks with OpenAI and Alphabet-owned Google to add genAI features for the iPhone that could be unveiled at what is expected to be its biggest-ever annual developer conference in June, Bloomberg News has reported.

According to Reuters analysts believe such an AI integration could drive demand for the next iPhone series, expected to be announced in the fall.

While executives at Microsoft, Alphabet (GOOGL.O), opens new tab, Meta Platforms (META.O), opens new tab and other major technology firms have talked up their AI strategies on quarterly conference calls in recent months, Apple CEO Tim Cook has discussed his plans for the emerging technology much less.

Adding AI features to iPhones could also help Apple to compete better with Huawei and Samsung Electronics (005930.KS), opens new tab, which reclaimed the title of the world’s top smartphone vendor from Apple this year, driven by demand for the AI features in its Galaxy S24 smartphones.

“Replacement cycle tailwinds and incremental generative AI features set up Apple well for a strong iPhone 16 cycle,” Bernstein analyst Toni Sacconaghi said this week as he upgraded the company’s shares to “outperform” from “market-perform.”

“We believe prevailing weakness in China is more cyclical than structural, and note historically Apple’s China business has exhibited much higher volatility than Apple overall, given its very feature-sensitive installed base.”

Thursday’s earnings will also be watched closely for updates on the company’s stock buyback plan and the Vision Pro, Apple’s first major product in years that hit the shelves in February.

After initial enthusiasm, there have been signs that demand slowed for the $3,500 device, with an analyst saying this month that Apple has pulled back its production estimates for the mixed-reality headset.

The rest of the company’s hardware business is also reeling from soft demand, with iPads and Mac sales expected to fall 11.4% and 4.3%, respectively, in the March quarter, Reuters reported.

Apple has signaled it is sharpening its focus on the devices, which have also been hobbled by a lack of major upgrades.

At an Apple event this month, a revamped iPad line-up is expected to be unveiled and media reports have said that it plans to update every Mac model with faster, AI-focused M4 processors.

The services business, which includes App Store and subscription services such as Apple TV, is expected to remain a bright spot with revenue growth of 7.7%.

Apple shares closed down 0.6% at $169.30 on Wednesday.

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Ethiopian volcano erupts for first time in nearly 12,000 years

Ash from the eruption drifted across the region, spreading over Yemen, Oman, India, and parts of Pakistan.

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The Hayli Gubbi volcano in Ethiopia’s Afar region has erupted for the first time in almost 12,000 years, sending massive ash plumes soaring up to 14 kilometres into the atmosphere, according to the Toulouse Volcanic Ash Advisory Centre.

The eruption began on Sunday and lasted several hours. Hayli Gubbi, located around 800 kilometres northeast of Addis Ababa near the Eritrean border, sits within the geologically active Rift Valley, where two major tectonic plates meet. The volcano rises roughly 500 metres above the surrounding landscape.

Ash from the eruption drifted across the region, spreading over Yemen, Oman, India, and parts of Pakistan. Satellite imagery and social-media videos captured a towering column of white smoke billowing into the sky.

The Smithsonian Institution’s Global Volcanism Program notes that Hayli Gubbi has no recorded eruptions during the Holocene, the period dating back about 12,000 years to the end of the last Ice Age.

Volcanologist Simon Carn of Michigan Technological University also confirmed on Bluesky that the volcano had “no record of Holocene eruptions.”

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Cloudflare outage easing after millions of internet users affected

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A global outage at web-infrastructure firm Cloudflare began to ease on Tuesday afternoon after preventing people from accessing major internet platforms, including X and ChatGPT.

Cloudflare, whose network handles around a fifth of web traffic, said it started to investigate the internal service degradation around 6:40 a.m. ET. It has deployed a fix but some customers might still be impacted as it recovers service.

The incident marked the latest hit to major online services. An outage of Amazon’s cloud service last month caused global turmoil as thousands of popular websites and apps, including Snapchat, were inaccessible due to the disruption.

Cloudflare – whose shares were down about 5% in premarket trading – runs one of the world’s largest networks that helps websites and apps load faster and stay online by protecting them from traffic surges and cyberattacks.

The latest outage prevented users from accessing platforms such as Canva, X, and ChatGPT, prompting users to log outage reports with Downdetector.

Downdetector tracks outages by collating status reports from a number of sources. “We saw a spike in unusual traffic to one of Cloudflare’s services beginning at 11:20 UTC. That caused some traffic passing through Cloudflare’s network to experience errors,” the company said in an emailed statement.

“We are all hands on deck to make sure all traffic is served without errors.”

X and ChatGPT-creator OpenAI did not immediately respond to requests for comment. – REUTERS

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China sends its youngest astronaut to ‘Heavenly Palace’ space station

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China’s Shenzhou-21 space rocket and its crew including the youngest member of its astronaut corps blasted off on Friday atop a Long March-2F rocket from the Jiuquan Satellite Launch Centre in northwest China, Chinese state media reported.

It was the seventh mission to the permanently inhabited Chinese space station since it was completed in 2022, Reuters reported.

Missions on China’s Shenzhou-21 spacecraft involve trios of astronauts on six-month stays in space, with veteran astronauts increasingly replaced by younger faces. First-timers Zhang Hongzhang, 39, and Wu Fei, 32 – China’s youngest astronaut to be sent to space – were picked to participate in the programme in 2020.

Commander Zhang Lu, 48, flew on the 2022 Shenzhou-15 mission.

FIRST SMALL MAMMALS ON SPACE STATION

The Shenzhou-21 astronauts will take over from the Shenzhou-20 crew who had lived and worked on board Tiangong, or “Heavenly Palace”, for more than six months. The Shenzhou-20 astronauts will return to Earth in the coming days.

The Shenzhou-21 crew were also joined by four black mice, the first small mammals to be taken to the Chinese space station. The mice will be used in experiments on reproduction in low Earth orbit.

Biannual launches have become the norm for the Shenzhou programme, which has in the past year reached new milestones with the deployment of Chinese astronauts born in the 1990s, a world-record spacewalk, and plans to train and send the first foreign astronaut, from Pakistan, to Tiangong next year.

The rapid advances have raised alarm bells in Washington, which is now racing to put a U.S. astronaut on the moon again before China does.

Both countries are also competing in nascent institution-building efforts, with the U.S.-led Artemis Accords on lunar exploration matched up against the Chinese and Russian-led International Lunar Research Station.

 

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