Apple iPhone sales fell for the second straight quarter, although the 15 per cent drop was less than feared.The company's total revenue dropped 14.6 percent in the third-quarter ended June 25th, also declining for the second quarter in a row.
Apple said it sold 40.4 million iPhones in the third quarter, more than the average analyst forecast of 40.02 million, according to research firm FactSet StreetAccount.
Net profit fell 27 per cent to $7.8 billion (€7.10 billion) in the quarter. Total revenue fell almost 15 per cent to $42.36 billion (€38.55 billion), beating analyst expectations. Apple had predicted revenue of between $41 billion and $43 billion for the three-month period, with margins of up to 38 per cent.
The figures follow a quarter in which Apple’s sales growth stalled for the first time since the launch of the iPhone in 2007. The company is facing a saturated smartphone market, customers who hang on to their handsets for longer and increased competition from low-cost rivals in markets such as China.
Sales in China also showed a decline, falling more than a third and picking up the pace of decline from the second quarter, when sales fell almost 26 per cent. However, chief executive Tim Cook said that the underlying business in China is stronger than the results imply, and he was encouraged about growth.
The latest figures include the impact on sales of the iPhone SE, Apple’s return to the five-inch screen phone it hoped would tap into the market of customers who were holding off from the larger-screened iPhone 6s and 6s Plus.
The iPhone accounts for up to two-thirds of Apple’s sales, but its other products – the Mac, iPad and Apple Watch – are also seeing some slowdown.
Apple has introduced two new iPads to its line-up, the 12.9 inch and 9.7 inch iPad Pro, in a bid to stimulate sales. Figures showed sales of the Apple’s tablet continued to decline, falling to 9.95 million. That compares with 10.25 million in the second quarter of 2016, and 10.9 million in the third quarter of 2015.
However, although iPad sales were down in units, the revenue was actually up as the iPad Pro is more expensive.
Sales of Apple’s Mac computers rose slightly, from 4.03 million in the second fiscal quarter to 4.25 million in the third quarter of the year. However, the figures are still down from the 4.7 million recorded a year ago.
Apple does not reveal exact sales figures for its Apple Watch, mixing the product in with revenue from its Apple TV, Beats products, iPod and other accessories. That showed a slight rise in revenue to $2.2 billion.
The company is also turning to digital products such as the App Store, streaming service Apple Music and its payments product Apple Pay for growth. Services revenue rose 19 per cent in the third quarter.
“We think services will continue to grow very briskly,” Mr Cook said. He alsopredicted that the services division of the business would grow to the size of a Fortune 100 company next year.
In a statement, Mr Cook said the figures reflected “stronger customer demand and business performance than we anticipated at the start of the quarter”.
“We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June,” he said.
Apple may also turn its attention to augmented reality, with Mr Cook confirming that the company has been investing in the technology and will continue to do so.
“In terms of AR, it’s incredible what has happened there,” he said, discussing the popularity of Pokemon Go.
“It shows that AR can be really great.”
(additional reporting Reuters)
