Apple said that for its fiscal third quarter, it sold 40.4 million iPhones, compared with sales of 47.5 million in the same period a year ago. That’s better than Wall Street’s projection for 40 million units.
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“China was a major letdown and I’m anxious to get more details as to what specifically drove the declines”, said Patrick Moorhead of Moor Insights & Strategy.
Another small bright spot was the revenue Apple gained from its services businesses, including sales from the iOS App Store, Apple Music and the iTunes Store.
Apple said it had carried out a cut of $3.6 billion in distributors’ inventory of the smartphones, up from the $2 billion mentioned in its previous earnings report.
Customer demand ‘was better than what is implied in our results and better than we had anticipated, ‘ he told Reuters in an interview. The lower price pushed down the average selling price of all iPhones to $595 in the quarter from $662 a year earlier.
Apple shared a few interesting tidbits of info during the call, including the news that the iPhone SE demand outstripped supply and that India is one of Apple’s fastest growing markets.
“It’s opening the door to customers we weren’t reaching before”, he said. Maestri added. “The economy has slowed down and the foreign exchange rate has weakened”.
“It is very clear that there are some signs of economic slowdown in China, and we will have to work through them”, he said. In the same quarter a year earlier, Apple’s Greater China sales rose 112%. That beat analyst forecasts for $US42.1 billion in revenues.
Apple’s services business, which includes the App Store, Apple Pay, iCloud and other services generated almost $6 billion in revenue, up 18.9 percent from the previous year. Apple suggested that iPhone revenue was down 23% year-over-year, and down 27% sequentially.
“On a personal note, during the past quarter, I visited China and India, and I am very encouraged about our growth prospects in those countries”.
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.
The company said it expects sales in the range of $US590 million to $US610 million in the third quarter, below market estimates for $US681.4 million.
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Apple managed to top analysts’ expectations after iPhone sales fell less than expected. Apple shares had been down 22% over the past year as of Tuesday’s close. These results compare to revenue of $49.6 billion and net income of $10.7 billion, or $1.85 per diluted share, in the year-ago quarter.
