Apple’s iPhone sales slip on next-generation hype
Apple shipped few-LOS ANGELES er iPhones than Wall Street expected in the first three months of the year, a surprise drop that dented its stock price.
Shares fell 2% after hours. The stock is up 27% this year.
So what happened to iPhone sales? Apple CEO Tim Cook attributed the dip to media hype on the next model. It was “due to the earlier and much more frequent reports about future iPhones,” Cook said in a call with analysts.
The quarter is usually a lull before the big fall sales launch. That pattern didn’t disappoint.
The Cupertino, Calif. company said net income rose to $11 billion, or $2.10 a share, on $52.9 billion in sales, up nearly 5% — less than forecast. That’s up from $10.5 billion, or $1.90 a share in the year-ago quarter, on $50.6 billion in sales. Analysts polled by S&P Global Market Intelligence forecast $2.02 a share on sales of $53.02 billion.
Sales of its best-selling iPhone fell 1% to 50.8 million, short of the 51.5 million iPhones expected by analyst firm CFRA Research.
iPad sales fell to 8.9 million units, and Mac sales gained 4% to 4.2 million. It also made a big jump in the Services division, which includes iTunes, iCloud and Apple Music, bringing in $7 billion in revenue.
Apple also raised its quarterly dividend to 10.5%, making it the biggest dividend payer in the world, according to S&P Dow Jones Indices.
The holiday quarter is when Apple is expected to release a redesigned, souped up 10th anniversary version of the iPhone. Consumers either buy the new iPhone in the first six months of release or wait for the next one.
Tuesday’s Apple results are “a non-event,” says Gene Munster, an investor who runs the Loup Ventures firm in Minneapolis. “Clear sailing to iPhoneX.”
Many analysts are referring to the next iPhone as either the iPhone 8 or the iPhoneX, reflecting the 10th anniversary edition. The first iPhone was released in June 2007. Some analysts have suggested Apple may have to delay it or offer it on a limited basis due to supply constraints.
While the iPhone still dominates Apple’s sales, the growth is coming from its Services division, which already tops revenues from Apple’s core Macintosh computer products. Credit Suisse says the division could reach $52 billion annually from $26 billion today.
Apple doesn’t report sales figures for the Watch, which hasn’t turned into an iPhone- or iPad-sized hit, but Cook, while declining to offer specifics, said that if it factored in sales for the Watch, Apple’s new AirPods and Beats headphones, sales would equal that of a Fortune 500 company.
Many analysts are referring to the next iPhone as either the iPhone 8, or the iPhoneX, reflecting the 10th anniversary edition of the smartphone that debuted in June 2007.