Apple sees drops on reports of declining iPhone sales
Apple Inc. recently announced its second quarter and first half results. Despite expectations of positive news, shareholders and investors were left to ponder some disappointing figures.
Shares in Apple had been trading at a record high of $147.28 prior to the results announcement, but the company’s stock slid by 2.1% down to $144 a share afterward in post-market trading.
Revenue Expectations Missed
The tech giant had projected revenues of $53.5bn. Second quarter sales did increase, rising to $52.9bn, compared to $50.5bn in the same quarter of last year, but still nearly $1bn below expectations. This was in part due to a decline in iPhones sales compared with the same period last year. Geographically, the biggest fall in Apple sales was seen in Chinese markets with revenue dropping from $12.4 billion last year to $10.7 billion.
On a more positive note, iPhone revenues during the second quarter of 2017 were higher than in Q2, 2016, and the total net income from Apple’s various businesses was up to $11 billion from $10.5 billion.
Diversification Strategy Bearing Fruit
Apple also reported the highest-ever quarterly revenues from its services operations. These diversifications – such as Apple Pay and Apple Music – are an important part of Apple’s overall business model. The firm are seeking to balance out their reliance on hardware products, such as the iPhone, iPad, iMac and Macbook.
Apple’s chief executive Tim Cook said, “We are proud to report a strong March quarter. With revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus.”
Cash Holdings
Investors were also keen to see if the company’s huge cash pile had increased. On this point, they were not disappointed – at the end of March Apple reported nearly $257 billion in cash and marketable securities.
Much of this cash reserve is hoarded overseas, in order to avoid a 35% tax rate. But, the new Trump administration proposed a new tax plan that would see a one-time repatriation levy for companies bringing these funds back to American shores. Apple CEO Tim Cook has confirmed that should such a proposal become reality, the company would consider participating.