Apple reported another quarter of falling iPhone sales Tuesday, underscoring worries that the firm relies too heavily on a flagship product that's running out of steam.
Apple sold 45.5 million iPhones, compared with 48 million in the same period last year, a drop of 5 percent. Shares fell more than 2 percent in after-hours trading.
Many analysts expected iPhone sales to be soft, even with its chief competitor, Samsung, dealing with headline-grabbing problems with its Galaxy Note 7 smartphones. But Apple has long-term problems with growth in smartphone sales that can't be offset by a short-term windfall. For example, revenue in China fell 30 percent from the year-ago quarter.
In a statement, Apple chief executive Tim Cook tried to focus attention on growth in the compnay's services sector, which includes iTunes and the App Store.
"We're thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record," Cook said.
The company reported better-than-expected financial results, with a quarterly income of $9 billion - giving it earnings of $1.67 a share, higher than the $1.65 analysts expected for the company's fourth quarter. Yet the firm posted $46.90 billion in revenue, vs. projections of $46.94 billion.
On a call with analysts to discuss the earnings, Cook highlighted the interconnectivity of Apple's systems - which, in turn, encourage customers to buy multiple Apple products - and the company's ongoing investment in new technologies such as artificial intelligence and voice-activated software.
But the iPhone still makes up 61 percent of the company's revenue, and no other Apple products saw sales growth from the same time last year. Revenue for the iPad unit was flat, while Mac revenue was down 17 percent. Revenue for "other products" - which include the Apple Watch and Apple TV - was down 22 percent.
Some analysts said that investors shouldn't read too much into the slower iPhone sales.
"Some reports will focus on Apple having a weak quarter which ignores the fact that it continues to be the most profitable device maker on the planet and there seems little evidence that will end any time soon," said Ben Wood, Chief of Research at analysis firm CCS Insight, in a note to investors ahead of earnings.
He also noted that Apple had a blowout quarter last year with the introduction of the iPhone 6s, which also accounts for the drop-off in sales as compared with last year. The iPhone 7 was seen as more of an incremental update than many expected, and therefore might not have been as appealing to smartphone buyers looking to upgrade their devices. Many may be holding out for next year's iPhone model; Apple is expected to make significant upgrades to mark the phone's 10th anniversary.
Apple, however, offered strong guidance for the upcoming holiday quarter - which, in its accounting, is the first quarter of the next fiscal year - indicating that it could be having supply issues that it will resolve, analysts said. On the call, Cook confirmed that there were supply issues, particularly with the iPhone 7 Plus. Apple is also gaining an extra week this year for its holiday quarter, which should help sales.
The firm is also expected during an event Thursday to announce new laptops, which many customers may be waiting to see before making their next Apple purchase.
The Washington Post
Wed Oct 26 2016
Tim Cook tried to focus attention on growth in the compnay's services sector, which includes iTunes and the App Store.
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Trump says he would impose tariffs on China if China went into Taiwan
Republican presidential candidate Donald Trump said he would impose additional tariffs on China if China were to "go into Taiwan,"
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.