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iPhone Sales Declined, But Services Revenue Grew In Last Fiscal Quarter

iPhone Sales Declined, But Services Revenue Grew In Last Fiscal Quarter

Enterprise & IT Oct 26,2016 0

Apple posted its third successive quarter of declining iPhone sales on Tuesday and forecast slimmer-than-expected profit margins over the upcoming holiday season even as it projected record sales. For its fiscal 2016 fourth quarter ended September 24, 2016, Apple said it sold 45.51 million iPhones. Revenue fell 9 percent to $46.85 billion. Gross margin was 38 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

Meanwhile, Apple's services division, which includes revenue from Apple Music, Apple Pay and other non-hardware offerings, was up 24 percent to a record $6.3 billion. Apple’s CEO Tim Cook noted in his statement that the segment was seeing "incredible momentum."

"Our strong September quarter results cap a very successful fiscal 2016 for Apple," said Cook. "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."

"We are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter," said Luca Maestri, Apple’s CFO. "We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program."

Apple forecast revenue of $76 billion to $78 billion for the current quarter. If it hits that estimate, this quarter would be Apple's biggest on record by sales, ahead of the $75.9 billion revenue it posted in the year-ago period.

However, Apple offered a conservative outlook on profit margins, 38 to 38.5 percent.

The company said improved sales from China were around the corner, despite revenue falling almost 30 percent from the country in the latest quarter. It said sales so far to India have only scratched the surface.

Maestri said it is "impossible to know" if there was any effect yet from rival Samsung Electronics Co Ltd halting production of its fire-prone Galaxy Note 7 phones earlier this month.

He also said that Apple was "supply constrained" and selling all the smartphones it could make.

Apple is still optimistic about its business in China, CFO Maestri said. While gross domestic product growth in the country has slowed, the economy is still growing, the middle class is expanding and smartphone ownership remains low, he said.

Chief Executive Tim Cook also said on a call with analysts that India was poised to boom in smartphone sales as a more powerful 4G cellular network was put in place this year and next.

Tags: Apple
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