Apple forecast misses estimates, casts shadow over holiday sales
APPLE’S revenue forecast fell short of analyst projections, casting a shadow over stronger thanexpected sales of iPhones during the recent holiday quarter.
Sales in the three months through March will be US$ 51.5 billion to US$ 53.5 billion ( RM240 billion), the Cupertino, California-based company said in a statement. The average estimate of analysts in a Bloomberg survey was US$ 53.8 billion. Apple expects a gross profit margin of 38 per cent to 39 per cent in the period, while analysts forecast 38.7 per cent.
“We were surprised by the strength of iPhone 7 Plus where we were actually short of supply throughout the quarter. We’ve been able to come into supplydemand balance in January,” chief financial officer Luca Maestri said in a telephone interview. Explaining the forecast for the current quarter, the CFO said a strong US dollar was “a bit of a problem for Apple,” like other US companies with significant business overseas.
Introduced in September, the iPhone 7 represented a modest update to its predecessor, the 6S, adding water resistance, an improved camera, battery life and processor while retaining similar styling. Expectations are mounting for a more significant upgrade to Apple’s flagship product later this year, the 10th anniversary of iPhone’s launch.
Apple reported earnings of US$ 3.36 a share in the three months through Dec 31. Revenue rose 3.3 per cent to US$ 78.4 billion. Analysts forecast profit of US$ 3.22 a share on revenue of US$ 77.3 billion, according to data compiled by Bloomberg.
Apple said it sold 78.3 million iPhones in the final quarter of 2016, generating US$ 54.4 billion in revenue in the period. The average sales price for each iPhone was US$ 695, compared with US$ 691 a year earlier. Analysts had forecast iPhone unit sales of 76.3 million and an average selling price of US$ 688, according to a Bloomberg News survey.
Global smartphone sales were largely unchanged in 2016, after years of growth, according to researcher IDC. That puts pressure on Apple because the iPhone generates almost twothirds of Apple’s revenue. Chief executive officer Tim Cook’s response has been to drive adoption of services such as Apple Music, iCloud and the App Store. Services revenue again represented the fastest growing segment, with sales jumping 18 percent to US$ 7.2 billion in the holiday quarter. Sales in China fell 12 per cent to US$ 16.2 billion, the only region to see a decline. Apple said it generated 64 per cent of its revenue overseas in the holiday quarter.
Cook has also discussed the potential of augmented reality and the possibility of major acquisitions to expand. Apple is working on digital glasses that may use augmented reality, people familiar with the matter said in November.
The presidency of Donald Trump may spark tax reforms which make it cheaper to repatriate cash reserves held outside the US. That could free up more of Apple’s cash to spend on take- overs. Apple had cash reserves of US$ 246.1 billion at the end of 2016, it said last Tuesday. — WP-Bloomberg
We were surprised by the strength of iPhone 7 Plus where we were actually short of supply throughout the quarter. We’ve been able to come into supply-demand balance in January. Luca Maestri, Chief financial officer