Upon the release of Apple’s second quarterly results, which revealed the company’s first decline since 2003, Apple’s guidance for this quarter hovered between $41 and $43 billion with $1.38 in earnings per diluted share.
Advertisement
Revenue for the third fiscal quarter contracted by 14.6 percent to $42.36 billion compared with revenue of $49.6 billion in the same period a year ago because of the drop in iPhone sales for the second consecutive quarter.
Revenue declined almost 15 percent to $42.36 billion from $49.6 billion a year earlier.
The iPhone accounts for up to two-thirds of Apple’s sales, but its other products – the Mac, iPad and Apple Watch – are also seeing some slowdown. Analysts say people just aren’t as excited about the newest iPhone models.
Sales in Greater China, once touted as Apple’s next growth engine, decreased by a third, compared with a 112.4 per cent growth in the year earlier quarter and a near 26 per cent fall in the second quarter.
Apple said that revenue from services grew 19 percent, driven by cash from App Store downloads and rising subscriptions at its stumbling Apple Music division. Has services saved it from an iPhone decline?
In the first three quarters of this fiscal year, our total revenue from greater China was nearly $40 billion, up 55% from the same timeframe just two years ago while iPhone units were up 47%. Mr. Cook said he expects that the services business next year will generate enough revenue that it would be a Fortune 100 company if it was an independent company. Since Apple met its expectations and still made $42.4 billion this quarter, investors were happy, so stocks were up 6.5% in after-hours trading this evening.
Apple’s gross profit margin was 38% in Q3, compared with 39.7% in the year-ago quarter.
Moorhead said, however, that increased services revenue – which includes the App Store and iCloud – was a “very big bright spot for Apple”. But the company still plans to invest in the country, Apple CEO Tim Cook said right after the company announced its earnings for Q3 2016.
Usually, the Wall Street vultures would be circling above Cupertino ready to take great chunks out of the stock price, but the company beat some low expectations and thus tens of billions are being added to Apple’s value as we speak.
This is the second consecutive quarter in which Apple’s sales have shown a downward trend. He was talking about the Apple TV, and yet that statement pretty much sums up where Apple is in the troubled summer of 2016.
Despite initial skepticism, Apple execs said the smaller, lower-priced iPhone SE launched this spring has been a hit.
Translation: Even if Apple doesn’t keep increasing the number of devices it sells, it could still make more money from the people who use those devices via these services.
“We’re looking forward to opening retail stores in India down the road, and we see huge potential for that vibrant country”, Cook said Tuesday.
Advertisement
While Apple fans are hyped about the arrival of the iPhone 7, the company’s iPhone sales have been climbing down the ladder.
