Apple’s second-quarter results were released on Tuesday and as many have expected, the company announced its first year-over-year decline in iPhone sales and quarterly revenue in over a decade.
It’s been announced that Apple had $50.6 billion in sales, which is 13 percent lower than last years same quarter and its profits have fallen 22.5 percent year-over-year to $10.5 billion, which translates to $1.90 a share. The gross margin was 39.4 percent, down 1.4 percent from last year, and international sales accounted for 67 percent of the quarter’s revenue.
The company has sold 51.2 million iPhones from January through March, which is 10 million fewer than last years same three months. Apple’s CEO Tim Cook told analysts on Tuesday that the market currently isn’t growing, however Cook did say “My view is that’s an overhang of the macroeconomic environment in many different places of the world. We are optimistic…the market will grow again.”
A lot of analysts weighed in on Apple’s current quarter release, to name a few Angelo Zion of S&P Global Market Intelligence said,
“It was a pretty poor quarter and the guidance was much weaker than we expected, but maybe investors have to look at Apple cycles a little differently,”
Steven Milunovich of UBS said,
Services revenue grew a strong 20% with the App Store accelerating at a well-above corporate average margin. Cook appeared to agree with our view that services’ main function is to create the ecosystem that allows Apple to charge premium hardware prices. Apple calls its OS’s (iOS, Mac OS) “platforms”—we agree though the App Store, Apple Pay, and Apple Music are secondary platforms to be monetized. Apple needs hardware hits to keep the installed base and services growing. A good start would be getting the one-third of the base still on a 4” phone to upgrade to the SE.
Apple provided the following guidance for its fiscal 2016 third quarter:
• revenue between $41 billion and $43 billion
• gross margin between 37.5 percent and 38 percent
• operating expenses between $6 billion and 6.1 billion
• other income/(expense) of $300 million
• tax rate of 25.5 percent
With things not looking too good from Apple’s second quarter, Apple remains hopeful and believes that its upcoming products will revive the company’s growth. Apple Services, which includes apps, media and payments, saw an earning with Apple Music growing to 13 million subscribers. Not to mention that Apple’s research team has been working on a VR project and automobiles.
Between October and March many consumers switched to the iPhone from competitors than in any prior six-month span. It should also be noted that Apple’s previous quarter sales in India went up to 56 percent. In addition, Cook has plans on building out faster mobile data and retail channels with local carriers in India, since India is considered one of the fastest growing markets and could potentially boost Apple’s sales.
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