One more quarter, the big technology companies have a date with Wall Street. Apple has just announced the financial results of its second fiscal quarter of 2016 , which begins each year in October. The figures are already here and they are not good at all. Tim Cook already warned in the previous quarter that iPhone sales would fall in comparison with the previous year’s, and this has happened.
The global figures show sales of 51.2 million iPhones , 10.3 million iPads and 4 million Macs sold. In total, they represent gross revenues of $50.557 billion and $10.516 billion in profits. These are very high figures, but do not exceed those for the same period last year.
The first drop in income in a long time
Apple’s financial results for the second fiscal quarter left a generalised drop in revenue . Overall, gross revenues fell by 12.8%, driven by the iPhone, iPad and Mac. Each of these products fell by 18.4%, 18.7% and 9%, respectively.
Profits have also been affected, falling by up to 22%. A similar situation was experienced in this parameter three years ago , when profits stopped growing and receded, to then resurface strongly. A growth that was due to the launch of the iPhone 6 and 6 Plus, which had their first diagonals and brought to light the accumulated demand for a larger phone.
The remarkable growth experienced by Apple’s other two segments – Services and Others – should be highlighted. In the former, revenue has grown by almost 20% to $5,991 million. The Other segment, which includes products such as Apple TV, Apple Watch, Beats products, iPods and various accessories from third parties and the company itself, grew by 29.6% to nearly 2.2 billion dollars. However, in the latter, the Apple Watch, which had barely begun to be marketed during the same period last year, should be highlighted.
This is the distribution of Apple’s revenue among the five segments of the company. Here you can see the decline of the iPhone, iPad and Mac, a space used by Services.
An expected fall in a difficult environment
Tim Cook dedicated the first words of the shareholders’ conference to put the context of the fall in revenue. Part of the cause of this fall is in the world currency exchange rates, given the strength of the dollar . Had this not been the case, the fall in revenue would have been 9% instead of 13%.
As expected, iPhone sales have fallen. The main cause, according to Apple’s CEO, is that the iPhone’s renewal cycle has been longer than expected. Coming from a generation (the iPhone 6 and 6s) that accelerated that renewal, that pace has not been maintained. Given that the weight of this product in Apple’s revenue mix is 65%, a decline in this segment has a significant impact on the company.
The positive side of the results
Resultados financieros del primer trimestre fiscal de 2016.
Despite the drop in revenues and profits, Tim Cook has emphasized the great growth of the Services segment . The emphasis on this segment comes from the previous quarter, in an attempt to convince Wall Street that Apple is not a company that sells hardware, but also has a solid business around it that exceeds $ 6 billion.
Cook also mentioned the high number of switchers from Android to iPhone, the high satisfaction rate of his products (some are 95% satisfied) and the huge growth experienced in India . According to the Apple executive, his company is also investing in R&D at full capacity.
Both Tim Cook and Luca Maestri have mentioned the good reception that the iPhone SE has had. Without mentioning specific figures, they say that production of Apple’s new four-inch terminal is still trying to match demand.
Other parameters of interest
All regions were affected by the fall in revenues, with the exception of Japan where it grew by almost 24% compared to the same quarter last year. China and the rest of Asia experienced the biggest fall, reaching 25%.
The average sales price of each Apple product remains above the market . Despite the decline in revenue, the average prices of the iPhone, iPad and Mac remain in line with the previous year.
The margins, as shown in the graph above, have also been impacted. Despite this, they are still well above those enjoyed by other competitors in the market.