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Category: Electronics / Stockmarket / Internet Culture

Apple revenue drops for the first time since 2001

Wednesday, 26 Oct 2016 08:20:34 | Sue Lannin

iPhone sales fall, including in the key growth market of China, despite the launch of the iPhone 7. (Reuters: Eduardo Munoz)

Falling iPhone sales have taken a bite out of Apple's earnings and revenue with earnings down by nearly a third in Greater China, which is seen as Apple's big growth market.

Key points:

  • iPhone sales drop to 45.5m in September quarter compared with 48m a year earlier
  • Apple's annual profit falls to $US45.6 billion, the first decline since 2001
  • Company's shares fall 2.6pc in after hours trade

Apple sold 45.5 million iPhones over the quarter compared to just over 48 million in the September 2015 quarter with a drop in revenue in both China and the Americas.

Despite the fall in sales, the figures were better than analysts predicted.

However, sales of iPads and Mac computers also fell over the year.

The result was Apple's first annual fall in profit and revenue since 2001.

Net profit for the September quarter fell 19 per cent to $US9 billion ($12 billion) down from just over $US11 billion ($14 billion) for the same time last year.

Revenue slumped 9 per cent to nearly $US47 billion and operating expenses rose with international sales making up two-thirds of revenue.

Annual profit for 2016 dropped from $US53 billion ($69 billion) last year to $US45.6 billion ($59.6 billion).

Despite the fall in profit and revenue, Apple chief executive Tim Cook was upbeat, saying there had been a positive response to the new iPhone 7 and he expected sales growth in the December growth.

"We're thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our services business, where revenue grew 24 per cent to set another all-time record," Mr Cook said.

Apple executives told a conference call that the company remained very bullish on China.

The company said it was also open to acquisitions of any size which had strategic value.

Mr Cook also said the IT giant was closely watching developments in the TV industry, with Apple starting to focus on original content.

"TV has intense interest with me and many other people here," Mr Cook said.

Apple's chief financial officer Luca Maestri said it was impossible to know if there was any impact on sales from the recall of rival Samsung's Galaxy Note 7 phone.

Production was halted on the Samsung phone after some of the smartphones caught fire.

The company said it expected revenue of between $US76 billion and $US78 billion for the first quarter of 2017 and it would pay a tax rate of 26 per cent.

Apple shares fell 2.6 per cent to $US115.10 in after hours trading in the US.

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