The prophecy came true: Apple's financial results worsened for the first time in 13 years

Published on April 27, 2016

The prophecy came true: Apple's financial results worsened for the first time in 13 years

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    Source: CNBS

    On April 26, after the closing of the main trading session on the New York Stock Exchange, quotations of the most expensive company in the world fell by almost 8%. The fall occurred against the backdrop of the results of the company in the II financial quarter . This, in turn, caused a drop in quotes of Asian suppliers of the corporation.

    In the second quarter of fiscal 2016, it recorded a decline in iPhone sales for the first time since the launch of smartphones in 2007 and the first reduction in revenue since 2003, writes The Verge with reference to the company's statements. Apple

    HeadTim Cook said he is ready for major asset acquisitions to solve the company's growth problems. Over the past four quarters, Apple has acquired 15 companies, Cook announced during a teleconference. But apparently, none of the deals was large enough to inform shareholders before.

    Unlike other Silicon Valley giants ( Alphabet , Cisco , Facebook ), Apple has never made large-scale purchases, the largest deal in its history is the acquisition of Beats Electronics headphone maker for $ 3 billion in 2014. And that is why Cook's words about the possibility of a major M&A deal attracted increased market attention.

    In the first three months of 2016, Apple reduced its net profit by 22.8% to $ 10.5 billion, compared with $ 13.6 billion for the same period in 2015.

    Apple’s quarterly revenue fell 12.8% from $ 58 billion to $ 50.6 billion, which is close to the bottom line of the company's own forecast ($ 50-53 billion).

    Analysts polled by Thomson Reuters forecast Apple’s earnings at $ 2 a share for revenue of $ 51.97 billion. Earnings per share decreased by 18.5% against the backdrop of a buyback program , from $ 2.33 to $ 1.90.

    In fiscal II, Apple sold 51.19 million iPhones, compared to 61.17 million for the same period last year, the company said. Wall Street analysts expected an average drop to 50 million.

    Sales of iPad tablets fell to 10.2 million, Mac - four million, while analysts expected them at 9.95 million and 4.53 million, respectively. The number of iPads sold fell by 19% compared to the second quarter of last year, computer sales fell by 12%.

    The news about the drop in Apple sales did not come as a surprise to investors: the company itself in January warned of an unusually low increase in the number of orders for the iPhone, noting that this could negatively affect the results of the second quarter.
    The average price of smartphones sold for the quarter was $ 642, while in the previous quarter this figure was $ 691. Luca Maestri, the corporate director, explained the decrease in the average price by the popularity of cheap iPhone 5s and medium-priced iPhone 6 and 6 Plus and by the fact that buyers are less likely to seek to change their old smartphone to a newer one.
    For the current (third) fiscal quarter, Apple predicts revenue in the range from $ 41 billion to $ 43 billion. Representatives of the company noted at the same time that the real demand for its smartphones is still above its own expectations. The consensus forecast for Wall Street was significantly higher - $ 47.3 billion.

    Smartphones provide Apple with two-thirds of revenue. In February, Gartner analysts estimated that in the fourth quarter of 2015 the number of iPhones sold dropped 4.4% year on year. They noted that this was the first reduction in smartphone sales in the company's history.

    The head of the company, Tim Cook, said that Apple showed good results in the second quarter given the strong headwind macroeconomic winds. The revenue was affected by the strengthening of the dollar, without it, sales would have decreased only by 9%, and not by 13%.

    Despite the drop in sales of the main product, Apple services such as the App Store , Apple Music, and Apple Pay were popular in this fiscal quarter . Income from them amounted to $ 6 billion, which is 20% higher than last year.

    The number of subscribers to Apple Music has grown to 13 million. In February, it did not exceed 11 million.

    Apple also announced an increase in quarterly dividends to 57 cents per share.

    Yesterday, the San Jose Mercury News publication published a list of Silicon Valley 150. The rating of the most profitable companies is based on financial indicators recorded for the four reporting quarters.

    Apple took first place in the ranking, with last year's sales of $ 235 billion. The next is Alphabet, which has earned $ 75 billion over the year.