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Holiday Quarter Sale Revenue Of Apple Drops By 15 Per Cent

Holiday Quarter Sale Revenue Of Apple Drops By 15 Per Cent
The revenues of smartphone maker Apple Inc dropped by 5 per cent year on year in the first quarter of fiscal 2019 – which also includes the holiday shopping seasons of 2018. The company reported revenues of $84.3 billion and quarterly earnings per share of $4.18.
“Revenue from iPhone declined 15 percent from the prior year, while total revenue from all other products and services grew 19 percent,” Apple said in a press release.
The revenues beat Wall Street estimates of $83.97 billion and earnings of $4.17 per share. However, this decline in revenues and profits for the quarter as reported by Apple was the first for the company in more than a decade’s time since the iPhone was introduced by it.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Apple CEO Tim Cook. The active install base of the company is about 1.4 billion devices, which Cook said is “a great testament to the satisfaction and loyalty of our customers, and it’s driving our services business to new records thanks to our large and fast-growing ecosystem.” The breakup of the devices includes 900 million iPhones.
The company however notched up a 17 per cent year on year increase in the revenues from iPad sale during the quarter an, 9 per cent increase in Mac and 33 per cent increase in Wearables / Home / Accessories.
Earlier this month, Cook had warned about the possibility bad sale of iPhones and had lowered the revenues guidance for the holiday period. And in a letter, the CEO had acknowledged “lower than anticipated iPhone revenue”. “While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be,” Cook wrote.
The lower than expected revenue guidance by the company was attributed to the phasing out of carrier subsidies and strong US dollar which impacted iPhone upgrades by customers and the customers are holding on to their older iPhones because of the battery replacement program of the company.
However the slowdown in the Chinese economy was identified to be the major challenge for the company.  Compared to the same quarter a year ago, the company reported a 27 per cent drop in the revenues from Greater China in the first quarter at $13.17 billion. The competition in the Chinese market was tough as Apple’s rivals priced similar products much lower than the iPhones. China is also a major manufacturing hub for Apple and the worsening of the trade war between China and the United States could make manufacturing situation worse and can significantly impact the company.
“January looks better than December looked. And I think if you were to graph up trade tension it’s clearly less in January than it was in December,” Cook said in an interview to the media just before the announcement of the results. “I’m optimistic that the two countries will be able to work things out.” Apple has been hit hard on Wall Street in recent months, with its stock falling a third from a record high back in October.
The services business of the company was one bright spot in the company’s performance during the quarter. This business includes iCloud, the App Store, Apple Music, Apple Pay, iTunes digital content, iBooks, AppleCare, and others and Cook said in his January note that the division generated revenues of more than $10.8 billion for the December quarter while the company ultimately notched revenues of $10.9 billion.

Christopher J. Mitchell

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