All told, Apple generated almost $7.8 billion in net income, down about 27%, on revenues of $42.4 billion, down 14.6%. It is the last one before the next iPhone model is released in the fall.
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Apple sold 40.4 million iPhones in its fiscal third quarter ended June 25. Analysts surveyed by Zacks had expected revenue of $45.91 billion. Wall Street forecast per-share earnings of $1.38.
The hope for Apple is that growth in the services business will help to balance out the decline in iPhone sales.
Apple is offering guidance for the September quarter of revenues between $45.5 and $47.5 billion, with gross margins between 37.5 and 38 percent.
Expectations were low leading up to the earnings report.Colin Gillis, an analyst with BGC Partners, went so far as to pen a “haiku” in an investor note this week: “It has become clear, that the muse that drove Apple, has gone somewhere else”. While it remains the most valuable company in the world by market capitalization and generates more profits than any company around, its main hardware products-the iPhone, iPad and Mac-are in decline, its new products aren’t successful enough yet to pick up the slack, and there are concerns that it has lost its innovative touch.
IPhone sales were still down on the same period a year ago. The company’s performance has declined sequentially and yearly, Apple (NASDAQ: AAPL) fared better in the previous quarter, with a total revenue of $50.5 billion, and the company’s results past year also show far better performance, with revenue of $49.6 billion, and net income of $10.7 billion, or $1.85 per diluted share. In short, Apple (NASDAQ: AAPL) generated 15 percent less revenue compared to the results achieved in 2015, but according Techcrunch, the earnings beat analysts’ estimates of $42.08 billion revenue, with $1.38 EPS. Shares rose 5.1 percent to $101.61 in after-hours trading.
In his much-awaited meeting with Prime Minister Narendra Modi, the Apple boss stressed the possibilities of manufacturing and retailing Apple devices in the country. China is a significant factor because it accounts for nearly a quarter of Apple’s sales. “We have been and continue to invest in AR in the long run”, he said.
This year is the first year that Apple has separated the services from the devices in its financial reporting – a shrewd move by Cook that illustrates that the company can still make more money from people who aren’t upgrading their devices.
This is also the first full quarter that the company’s revamp of the 4-inch iPhone, the cheaper iPhone SE, was for sale. “The numbers aren’t getting any worse and we’re getting into a new iPhone cycle soon”. Sales there fell by 33.1% compared with the 112.4% growth in the same quarter the previous year.
All eyes are on its cash cow, the iPhone.
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India is expected to overtake the United States as the second-largest smartphone market next year with robust annual growth, a Morgan Stanley report said recently. Apple’s going to have to look elsewhere (like India) for another major growth engine.
