Apple Profit Falls As iPhone Sales Slow

Apple has posted a decline in both profits and revenue in the second quarter, as sales of its main cash cow – the iPhone – fell 17 percent, stoking concerns of smartphone saturation.

Despite sales of Apple’s iPhones falling at their steepest-ever rate, CEO Tim Cook remained optimistic and said sales were stronger towards the end of March. This included China where Apple recently cut iPhone prices to boost demand.

Apple is not alone in reporting a decline. Earlier this week Samsung shocked the markets after it unveiled a dramatic fall in both sales and profits, but it blamed that on slowing demand for chips and screens.

Profit fall

So how bad were the results at Apple? Well it is important to note that the firm is still hugely profitable, but there has been a noticeable decline.

For the second quarter ending 30 March, Apple posted a net profit down 16.3 percent to $11.6bn.

This was down from the $13.8bn profit Apple recorded in the same quarter a year earlier.

There was equally ‘bad’ news on the revenue side after sales also fell to $58bn in the quarter, down from $61.1bn a year earlier.

This revenue was below the $57.37bn that analysts had been expecting, Reuters reported.

It is clear that Apple’s performance has been dented by slowing sales of its iPhone products, which remains the firm’s principle money maker.

Indeed, sales of iPhones account for more than half of all revenue, but it fell 17 percent in the fiscal second quarter from a year earlier and slightly missed analyst expectations.

Apple reported that iPhone revenues were $31bn, slightly below analyst estimates of $31.1bn.

Looking forward

Yet there was little sign that Apple’s management are overly concerned at the decline.

“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record,” said Tim Cook.

“We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services,” said Cook. “We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June.”

Looking forward Apple said it expects revenue between $52.5bn and $54.5bn for the current quarter ending in June. That projection pleased analysts who were expecting $51.93bn.

And in a sign of how rich Apple actually is (it has nearly $80 billion in cash and other securities), the firm announced a new $75 billion share buyback.

Earlier this week Apple pulled a number of parental control apps from its App Store over privacy and security concerns.

The firm issued a rare public rebuttal to a media report, when it insisted the move was nothing to do with removing competing apps against its Screen Time feature.

Quiz: How well do you know Apple?