Apple reports fall in iPhone sales as buyers await 10th anniversary iPhone going out in September

Revenue from Greater China falls 14.1 per cent, but Apple believes performance will get better

PUBLISHED : Wednesday, 03 May, 2017, 4:54am
UPDATED : Wednesday, 03 May, 2017, 6:10am

Apple reported a surprise fall in iPhone sales for the second quarter on Tuesday, indicating that customers had held back purchases in anticipation of the 10th-anniversary edition launch of the company’s most important product.

The company boosted its capital return programme by US$50 billion, increasing its share repurchase authorization by US$35 billion and raising its quarterly dividend by 10.5 per cent.

“There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter’s miss,” said James McQuivey, a Forrester Research analyst. “If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn’t confident it will beat those expectations.”

Apple’s revenue from the Greater China region fell 14.1 per cent to US$10.73 billion in the quarter, as cheaper rivals in the region chipped away at sales.

Apple chief financial officer Luca Maestri said that sales of Macs and the company’s services were strong in China during the March quarter. “The performance we’re seeing in China should get better going forward this year,” he said.

Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1, down from 51.19 million a year earlier.

Analysts on average had estimated iPhone sales of 52.27 million, according to financial data and analytics firm FactSet.

Expectations are building ahead of Apple’s 10th-anniversary iPhone range this fall, with investors hoping that the launch would help bolster sales.

Apple typically launches its new iPhones in September.

A big jump in sales usually follows in the holiday quarter, before demand tapers over the next few quarters as customers hold back ahead of the next launch.

Apple’s 10th-anniversary iPhone range might sport features such as wireless charging, 3-D facial recognition and a curved display.

The company forecast total revenue of between US$43.5 billion and US$45.5 billion for the current quarter, while analysts on average were expecting US$45.60 billion, according to Thomson Reuters I/B/E/S.

Analysts on average expect the company to sell 42.31 million iPhones in the current quarter, according to FactSet. The company’s net income rose to US$11.03 billion, or US$2.10 per share, in the second quarter, from US$10.52 billion, or US$1.90 per share, a year earlier.

Analysts on average had expected US$2.02 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 4.6 per cent to US$52.90 billion in the quarter, compared with analysts’ average estimate of US$53.02 billion.

A 17.5 per cent jump in the company’s services business - which includes the App Store, Apple Pay and iCloud - to US$7.04 billion boosted revenue.