Thursday, April 28, 2016

Apple Revenue Falls for First Time Since 2003


iPhone Officially in Decline

Apple has reported a drop of 13% on Tuesday, in its second quarter revenue as sales of iPhone had fallen. The quarterly sales reported by the technology giant was $50.56bn down from $58bn last year, which is the first fall in sales for the company since 2003. Apple had sold about 51.2 million iPhone during the quarter, down from 61.2 million the same quarter of 2015.China had been a weak spot where the sales had fallen by 26% and the results were hit by the influence of a stronger dollar.

 Apple shares had fallen by 8% after several hours of trading and its shares had dropped close to 20% over the last twelve months. Tim Cook, chief executive of Apple had commented that the company had performed well in the face of strong macroeconomic headwinds. Slowdown in sales in established markets had not been much of an issue for Apple, since China has always been there to support its earnings, keeping it posting, after each quarter of record breaking profits. The whole company tends to suffer with regards to revenues in China taking a hit. The most successful technology product in history, the iPhone, is now officially in decline.

Smartphone Boom beyond Its Extraordinary Peak

The company had notified about three months ago and to see the numbers for real would give investors reason for concern. Some have been considering the recent incidents as a sign that it is the end of a gold age for hardware makers and the smartphone boom is beyond its extraordinary peak. Apple, more than any other company, apparently needs the next runaway success sort to come along. The Apple Watch will be bringing in an estimated $1bn every quarter though that would not be sufficient.

It would require another punch like the iPhone but there seems to be no sign of one coming up soon. Quarterly profit of Apple had dropped to $10.5bn from $13.5bn. However, it had been reported that it would return $50bn to the shareholders through an increase in share buybacks as well as a 10% increase in quarterly dividends. The company had cautioned, back in January, that it had been facing its slowest-ever increase in orders for the iPhone and the same would cut into second quarter earnings.

Apple – Expects Access to Service, Restored Soon

Decreasing growth in the sales of smartphone had an impact on the overall industry and companies have been stressed in locating the next area of innovation. Geoff Blaber from CCS Insight had stated that the industry is in a lull between the mobile boom and what comes next in automotive, the connected home, health and industrial applications of the internet of things. Its service unit had been one bright spot for Apple which comprises of App Store downloads, Apple Pay and Apple Music.

 The separation experienced a 20% growth when compared to the same quarter in 2015. But the growth could be threatened at the unit by a new law passed in March, in China which needs all content shown to Chinese people to be stored on servers based on the Chinese mainland. This resulted in Apple’s iBooks and iTunes movies services to be shut down in the country. Apple has stated that it expects access to the service would be restored very soon.

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