So here it is. The big blow we all knew would come, but were still waiting pretty eagerly for. Apple has now officially posted its second quarter earnings, and the stun is pretty much larger as compared to the one which came when Apple forecasted last quarter, about the first ever decline in revenues in recent history.
The Company posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. In a nutshell, there was a massive $8 Billion loss in revenues to world’s most profitable company, Y-o-Y. Gross margin was 39.4 percent compared to 40.8 percent in the year-ago quarter. International sales accounted for 67 percent of the quarter’s revenue.
The numbers are disappointing not just because they show a revenue drop, bit also because they even missed analyst expectations of $52 Billion in revenues, by a fair bit of margin.
Here’s Apple’s breakdown of iPhone, iPad, and Mac sales from the quarter:
- iPhone: 51.1 million units
- iPad: 10.2 million units
- Mac: 4 million units
For iPhone sales, that’s an 18% year-over-year drop and a 19% drop for iPads. The only possible silver lining, could be the fact that iPhone sales actually beat analyst expectations of a 50.7 Million iPhone sales, only barely though.
Talking about this numbers, CEO Tim Cook said in a prepared statement,
Our team executed extremely well in the face of strong macroeconomic headwinds, We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.
As a direct outcome of these results, Apple stocks have literally tanked, falling by as much as 8% in external trading. Investors have punished the Cupertino giant for its inability to continue the scale of growth it set itself on. Moreover, investors are also doubting Apple’s future ability to grow, considering that even consumers have now started complaining of a rather monotonous unveiling of newer designs and lack of innovation.
The Dragon Disappoints
Touted once, as perhaps its strongest market — stronger than home market US — China was the single biggest factor in Apple’s steep decline in revenues. Revenues from China were $12.49 Billion, a massive 26% decline as compared to the same quarter in previous year.
Asia Pacific revenue dropped 25% year-over-year. Total Apple revenue dropped 13% year-over-year. The US and EU dropped 10% and 5% year-over-year, respectively.
Apple however, had already forecasted a dip of such scale earlier, citing global economic issues and inflated iPhone 6 demand due to supply constraints the year earlier.
A Weak Foreacast, Yet Again
The woes haven’t just ended yet. Apple has again posted a weak guidance to its next quarter results. Here’s what the Cupertino giant thinks it’ll achieve :
- revenue between $41 billion and $43 billion
- gross margin between 37.5 percent and 38 percent
- operating expenses between $6 billion and $6.1 billion
- other income/(expense) of $300 million
- tax rate of 25.5 percent
These numbers are significant, considering that the revenue will again show a massive decline compared to the $49.6 Billion it brought last quarter. Analysts were expecting $47 Billion, thus showing clear signs of a slowing growth engine for Apple.