IPhone reports dip in sales ahead of 10 year anniversary

Lena Tucker
May 6, 2017

Apple, the company with the greatest stock market capitalization in the United States, on Tuesday reported that in the second quarter of its fiscal year ending on April 1, 50.76 million units of the iPhone were sold, generating revenues of $33.249 billion. However, the company made more money off the iPhones it did sell this quarter over last - $33.25 billion against $32.86 billion, to be precise. Apple does not reveal sales of its Apple Watch, but its chief executive Tim Cook said sales had doubled in the previous year.

This figure was also down 34 percent from revenue of $16.2 billion recorded for Q1 in the Greater China markets, including mainland China, Hong Kong, and Taiwan.

"We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus", said Tim Cook.

"By doing that, we can be the ripple in the pond".

Timothy D. Cook, Apple's chief executive, focused on several bright spots during a call with investors.

FQ2 revenue of $52.9 billion compared with the firm's $52.7 billion estimate and consensus of $53.0 billion, with adjusted EPS of $2.10 above the firm's $2.00 estimate and consensus, helped by several below-the-line items.

But this factor has always been taken into account when analyzing Apple's results, and if in the second quarter of its fiscal year iPhone sales did not reach expectations, the next quarter's results could be worse. The announcement led to a more than 2 per cent drop in its stock during after hours trading. If you think about it, what many, many companies now sell globally. This quarter, Apple sold 8.9 million iPads, down 13 percent from the 13 10.3 million units it sold in FQ2 2016 a year earlier.

Apple had launched the Product Red iPhone 7 and 7 Plus during the second quarter to help finance programs tackling HIV and AIDS in sub-Saharan Africa.

Services revenue grew 17.5% YOY to $7.0 billion, with App Store revenue up 40% YOY, Apple Pay traffic up 450% and music growing double digits. The company said it expects gross margins next quarter between 37.5 percent and 38.5 percent, versus analysts' expectation of 38.3 percent, according to FactSet.

Ahead of the earnings, some analysts suggested users would hold off on purchasing new iPhones ahead of a much-hyped refresh expected later this year.

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