Down is up: iPhone slumps, iPad soars, and a massive quarter isn’t massive enough

If you were bored of all those stories every three months about Apple’s quarterly financial results setting records and posting one banner quarter after another, I’ve got great news! Apple’s first fiscal quarter of 2023–covering the holiday quarter of the calendar year 2022–was merely the company’s second-largest quarter ever, unable to match up with the same quarter a year ago.

The world of Wall Street doesn’t care so much about Apple’s tidy $30 billion profit during the quarter. It’s more worried about that 5 percent year-over-year decline–the company’s first such decline in almost four years. Fortunately, Apple executives were well prepared on Thursday to explain what happened. You see, it’s all about headwinds.

Captain Cook takes on the macroeconomic headwinds

You know things are bad when the nautical metaphors come out.

During Apple’s hourlong quarterly conference call with Wall Street analysts, the word “headwinds” was used 11 times, slightly edging out the 10 times we heard the word “macroeconomic.” (They were used together as “macroeconomic headwinds” three times.)

If you’re not someone who is as well-versed as Tim Cook and Apple CFO Luca Maestri in navigating the choppy seas of modern business, let me explain what’s going on here. The U.S. dollar has been strong, so strong that it makes Apple’s positive business trends in other countries look negative.

“On a constant currency basis, we grew year over year and would have grown in the vast majority of the markets we track,” Cook said on Thursday. This is the thing about Apple, as an American company, reporting all its results in U.S. dollars. In China, you might look at what Apple sold last year and this year and see that sales are up! But if the U.S. dollar has strengthened in the last year, the change in exchange rates will make last year’s number seem larger when converted to U.S. dollars.

According to Apple, the…