Apple Reports Drop In iPhone Sales As It Increases Share Buybacks

Francis Harris
May 3, 2017

With that said, the iPhone 7 and iPhone 7 Plus are still pretty darn important.

Apple AAPL, +2.04% has increased its investor return program around fiscal second-quarter earnings every year since 2012, when it originally announced its first dividends and stock buybacks since Steve Jobs's triumphant return.

And while revenue from services last quarter was a little better at $7.17B, this is mainly due to the large sales bump Apple gets from the holiday season.

According to today's report, Apple sold 50.8 million iPhones in the second quarter. For Apple, around 50-55 per cent of the iPhones sold in India is generated from online sales as compared to the smartphone industry average of 30 per cent. Apple will not compete on price with online marketplaces for the products it sells through its own online store. That ended what turned out to be a string of three quarters of slipping sales.

For the second quarter, the company's net income rose to $11.03 billion, or $2.10 per share, compared with $10.52 billion, or $1.90 per share, a year earlier. As I detailed in my earnings preview article, the $45 billion figure was key for the revenue midpoint, and Apple did not surprise me by coming in below that. The DigiTimes reported recently Apple inked a $9 billion two-year contract deal with Samsung for OLED display supplies. We see several financial benefits of this.

Shares of Apple are up about 26.8 per cent for the year to date in anticipation of a new iPhone model expected to be released in September marking the 10th anniversary of its flagship product. First Trust Advisors LP boosted its position in Apple by 6.6% in the first quarter.

Apple hit its own guidance between $51.5 billion and $53.5 billion in revenues, but missed the slightly more optimistic analyst estimates.

Roughly one million iPhone users per quarter in the USA may be deferring purchases until the next iPhone arrives, wrote Jeffrey Kvaal of Instinet LLC Equity Research in a note to clients. Apple plans to start assembling of iPhones in Bengaluru by June. The company is also finding ways to squeeze the iPhone sales price even higher, which can help Apple's bottom line even as it becomes more hard to persuade more people to pony up for a new model.

Apple managed to break its losing streak in the December quarter thanks to strong demand for the iPhone 7 Plus. Apple also said its board has approved a 10.5% increase in the company's quarterly dividend.

There will also be interest if the company has anything to say Tuesday about the mountain of cash it is sitting on.

Plus, a lot of Apple's services offerings are re-occurring, like Apple Music, iCloud Storage and to an extend, Apple Pay.

The company keeps the vast bulk of that pile in foreign countries to avoid paying taxes on profits made outside of the United States.

Chief Executive Officer Tim Cook has repeatedly sought to highlight Apple's services business, the fastest growing part of the company past year.

Other reports by TheDigitalNewspaper

Discuss This Article