Apple opts for caution in light of falling sales

Apple reported lower sales and forecast a third straight quarterly revenue drop, dragged by slowing demand for iPhones amid a lacklustre global smartphone market and intensifying competition in China.

Apple opts for caution in light of falling sales

Fourth-quarter revenue will be $45.5bn-$47.5bn, Apple said last night. On average, analysts projected $45.5bn. A year earlier, sales were $51.5bn.

Gross margin in the period that ends in September will be 37.5% to 38%.

Fiscal third-quarter revenue fell 15% to $42.4bn. Analysts had predicted revenue of $42.1bn. The drop was the first back-to-back quarterly sales falls since 2002, according to Bloomberg data. Revenue from greater China slumped 33%.

IPhone unit sales for the quarter fell 15 % from a year earlier to 40.4m. Still, that exceeded the average estimate of 39.9m.With the iPhone accounting for almost two thirds of sales, Apple has felt the brunt of a slowdown in the global smartphone market.

That has been made worse by deterioration in China, where consumers are choosing cheaper handsets over Apple products - even the low-end iPhone SE introduced earlier this year.

CEO Tim Cook sought to emphasise surging revenue from services, such as the App Store, iCloud storage, and Apple Music, as a way of making up for cooling device sales.

Yet those businesses still represent just a fraction of revenue compared with the iPhone, which may not be significantly revamped until next year as consumers wait ever longer to upgrade their handsets.

“We had a June quarter that was better than we had expected 90 days ago,” Chief Financial Officer Luca Maestri said by phone.

“The March quarter seems to have been the low point for the cycle.”

“There are some macro conditions that exist in China, both in mainland China and in Hong Kong.” he said.

“The economy has slowed down and the foreign exchange rate has weakened.” The Details

Third-quarter net income fell 27% to $7.8bn, or $1.42 a share, still above analysts’ average per-share forecast of $1.39.

Apple shares slipped less than 1% to $96.67 at the close in New York. The stock has fallen 8.2% so far this year.

Third-quarter iPad shipments were 9.95m. Analysts projected an average of 9.1m units. Apple said it sold 4.25m Mac personal computers, compared with an estimate of 4.4m.

Services revenue rose 19% to $5.98bn.

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