Apple iPhone sales dropped to less than half of quarterly revenue for the first time in seven years, but CEO Tim Cook on Tuesday described the change as successfully diversifying away from a single product and forecast results above Wall Street targets.
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That strategy proved especially useful in China, the world’s largest smartphone market. Investors feared a drumbeat of negative shipment data from the Chinese government and analysts meant problems for the iPhone maker.its greater China sales, which had gone into a near free fall earlier this year, dipped only slightly, assuaging concerns that trade tension were undermining Apple’s standing in one of its most important markets. Shares rose 4.25 percent after hours.
Moribund global mobile phone sales have led Apple to focus on accessories like the Apple watch and growth in music, apps, gaming, video and a credit card coming in August. In mainland China, cook said the overall number of Apple device users had grown in the fiscal third quarter, helping to increase the market for its services, whose sales were up by more than 10 percent there.
iPhone sales fell 12 percent to $25.99 billion (roughly Rs. 1,80,000 crores), after dropping 17 percent in the previous quarter, and matched Wall Street targets. Wearables and other accessories revenue rose nearly 50percent, topping expectations. Services revenue rose 12.6 percent to $11.46 billion (roughly Rs. 79,000 crores), slowing and slightly missing expectations but setting a new record.
Apple said it expects revenue for the current fiscal fourth quarter of between $61 billion and $64 billion, compared with analyst estimates of $61.02 billion. At the high end of Apple’s forecasted range, sales would beat the prior year’s $62.90 billion in sales, despite the fact that analysts expected continued lacklustre iPhone sales until 5G models arrive in 2020.
For the fiscal third quarter ended in June, Apple reported a 1 percent rise in revenue to $53.8 billion and a 7 percent drop in earnings per share to $2.18, compared with expectations of $53.39 billion and $2.10 per share, according to Refinitiv data.
Hal Eddins, chief economist for Apple shareholder Capital Investment Counsel, said he was pleasantly surprised to see iPhone sales declines slow down versus the prior quarter.
“You really don’t hear people talk about their phones like they did several years ago,” Eddins said. But, “the key is that when people want to splurge on a phone, they do it with an Apple product.”
Trade tension still looms large:
Trade tension has slowed down economic growth in China, a major market for Apple, which effectively cut iPhone prices in China earlier this year after currency exchange rates had made its phones too expensive for many Chinese consumers. Apple’s market share in China declined to 5.8 percent from 6.4 percent, according to market research firm Canalys, in part because smartphone rival Huawei Technologies gained market share to become the top handset seller in the country.
Conclusion: Apple experienced a smaller market share loss than competitors such as xioami, Oppo, and Vivo, according to Canalys data. Cook said that iPhone price adjustments, plus the Chinese government’s move to cut phone taxes, helped keep iPhone sales in China from eroding further.
