News
Device maker’s revenue slumps 14% led by steep fall in China.
Apple late on Tuesday reported better than expected iPhone shipments during its fiscal third quarter, but volumes were still noticeably lower compared to a year ago.
The U.S. device maker shipped 40.4 million iPhones in the three months to 25 July, compared to 47.53 million in the same period of 2015. That figure came in ahead of analyst expectations of 39.9 million, according to Radio Free Mobile founder Richard Windsor.
In a statement, Apple CEO Tim Cook said the results "reflect stronger customer demand and business performance than we anticipated at the start of the quarter."
Nonetheless, it marks the second consecutive quarter of falling iPhone shipments and suggests that Apple will need to pull a rabbit out of the hat when it launches the iPhone 7 later this year in order to reinject some excitement into consumers.
Apple still does not disclose Apple Watch shipments, reporting only revenue, and even then it is combined with revenue from other products, which includes Apple TV, iPod, Beats headphones, and branded accessories. Revenue generated by this segment fell to $2.22 billion from $2.64 billion.
iPad shipments continued their slow and steady decline, falling to 9.95 million units in fiscal Q3, down from 10.93 million a year ago. Mac shipments edged down to 4.25 million from 4.8 million.
Slowing shipments took its toll financially, as Apple’s quarterly revenue fell 14% year-on-year to US$42.36 billion (€38.52 billion), and net profit shrank to $7.8 billion from $10.7 billion. Revenue still came in slightly ahead of analyst expectations of $42.1 billion, according to Windsor.
Apple continued to struggle in China, as revenues there plunged to $8.85 billion from $13.23 billion a year earlier, reflecting economic uncertainty and the continuing rise of low-cost, home-grown competitors.
North America, its largest market in revenue terms, saw revenue fall to $17.96 billion from $20.21 billion. In fact, the only one of Apple’s regions to see an increase in revenue was Japan, where it climbed to $3.53 billion from $2.87 billion.
The brightest spot in Apple’s performance was its services business, which includes its App Store, iTunes, and Apple Pay, among others. It reported revenue of $5.98 billion, compared to $5.03 billion a year earlier.
"App Store revenue was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record," said Apple CFO Luca Maestri.
Apple provided current-quarter revenue guidance of $45.5 billion-$47.5 billion, compared to $51.5 billion generated in fiscal Q4 2015. It expects gross margin to come in at 37.5%-38%, narrower than 39.9% recorded a year ago.
