USA TODAY International Edition
Apple stock tumbles 3% after rare drop in sales
It’s the first annual decline since 2001, before iPod’s release
Apple reported its first annual dip in sales in more than a decade Tuesday, underscoring softening iPhone sales.
The Silicon Valley company’s fiscal year 2016 revenue of $ 215.6 billion declined 8% from the $ 233.7 billion it rang up the previous fiscal year. It’s the first drop for Apple since 2001, shortly before the release of the iPod and the company’s comeback under then- CEO Steve Jobs.
The fourth- quarter results, announced after the close of markets, marked Apple’s third consecutive quarter of declining revenue and iPhone shipments. Apple reported earnings of $ 1.67 per share on revenue of $ 46.9 billion, compared with $ 1.96 and revenue of $ 51.5 billion in the same quarter a year ago. The performance was roughly in line with analysts’ forecasts of earnings of $ 1.63 per share on revenue of $ 46.9 billion. Apple had provided guidance of $ 45.5 billion to
$ 47.5 billion.
Shipments of iPhones, meanwhile, were 45.5 million, down 5% from 48 million in the yearago quarter. Analysts had expected 44.8 million, perhaps an indication that Apple has benefited, in part, from Samsung’s problems with its now- defunct Note 7 phablet and an extra week in September. Another blemish on the Apple report: China was down 30% year- over- year in the fourth quarter.
The news sent shares of the Cupertino, Calif.- based company skidding 3%, to $ 114.86, in extended trading.
“It was a very strong quarter” with continued improvement in iPhone shipments year- over- year, Apple CEO Tim Cook said in a conference call following the earnings announcement. He lau- ded the performance of its services business, which vaulted 24%, to a record $ 6.3 billion.
The annual decline did not surprise analysts because Apple has “telegraphed” it for some time, says Bill Kreher, technology analyst for Edward Jones. He, like many of his peers, predict a rebound in fiscal year 2017 when Apple is expected to unveil the 10th- anniversary iPhone, which could be a big seller.
Indeed, Apple offered guidance in its December quarter of a whopping $ 76 billion to $ 78 billion in revenue.
The enhanced product lines should “enlarge ( Apple’s) installed base” and elevate its highmargin services business,” Kreher says, pointing to Apple’s burgeoning unit that includes Apple Store, Apple Music and Apple Pay.
“This is one of the more reliable ways to gauge the strength of Apple’s ecosystem,” says David Kretzmann, senior analyst at Motley Fool, a financial services company.
Apple’s breakneck growth over the past 15 years highlights how far it has come from its last dip in annual revenue, analysts say. In fiscal year 2001, it reported $ 5.4 billion in sales.