APPLE EXPECTS GROWTH AFTER DECLINE
The company reports lower quarterly profit and iPhone sales, but remains optimistic.
After stumbling in 2016, Apple is betting on a better year ahead.
The Silicon Valley tech giant is forecasting a return to growth in iPhone sales this winter after a rare slump that depressed Apple’s revenue and stock performance over the last three quarters.
The company is also set to unveil new Mac computers this week, hoping to boost lagging interest in a set of products that are symbolically significant even if they’re less financially important to the company than the iPhone.
Apple has been struggling with shrinking demand for its signature products at a time when analysts say it is increasingly difficult for tech companies to come up with dramatically new features. Many consumers are holding on to their old smartphones and PCs for longer, seeing little reason to buy a new model that’s only slightly better.
One consequence: Apple sold 45.5 million iPhones in the quarter that ended in September. That was slightly more than the 45 million that Wall Street expected, but 5% fewer than the 48 million iPhones it sold in the same period a year earlier.
Still, analysts say consumers are showing renewed interest in Apple’s latest iPhone models. Based on early sales, Apple Chief Financial Officer Luca Maestri said, “We feel very good about the momentum of the 7 and 7 Plus.”
The 7 and 7 Plus models aren’t a radical change from the iPhone 6 and 6 Plus. But analyst Patrick Moorhead said the new phones have enough improvements, including new camera systems, longer battery life and water resistance, to fare better than last year’s lackluster 6S and 6S Plus.
Apple could also benefit because many iPhone 6 owners may be ready to replace their 2-year-old phones.
Apple’s revenue forecast calls for sales of $76 billion to $78 billion in the current quarter. That’s higher than the Wall Street estimate of just under $75 billion.
Apple’s forecast also represents a modest increase over the $75.8 billion in sales that Apple reported for the same quarter last year, and it suggests the company expects to beat last year’s record of 74.8 million iPhones sold in that period, which is traditionally Apple’s biggest quarter for sales.
Apple shares closed Tuesday at $118.25 but fell 2% in late trading. The stock had been gaining in recent weeks after wallowing below $100 for much of the spring and summer.
Reporting on its fiscal fourth quarter, which ended Sept. 24, Apple said revenue declined 9% to $46.8 billion compared with a year earlier while profit fell 19% to $9 billion. Earnings amounted to $1.67 a share, compared with Wall Street estimates of $1.66 a share on revenue of $47 billion.
Apple ended its fiscal year with annual sales of $215.6 billion and profit of $45.7 billion. Most companies would be thrilled with those numbers. But some analysts warn that Apple relies too heavily on a single product line, the iPhone, which contributed nearly two-thirds of Apple’s revenue.
“Management hasn’t diversified the revenue stream,” said BGC Partners analyst Colin Gillis, who noted that Apple faces a host of competitors in a global smartphone market that’s seeing slower growth overall.
“Counting phones is a horrible way to live and die every quarter.”