Business in Tech

Apple Reports First Drop In Annual Revenue Since 2001 But Services And The iPhone 7 Promise A Better Future.

Apple has reported its latest quarterly earnings. First thing to know is that this is Apple’s first drop in annual revenue since 2001 but overall earnings beat expectations. It’s also expecting a really strong iPhone 7 sale this holiday especially when the other major competition from Samsung won’t be on sale this holiday.

They reported earnings of $1.67 per share versus $1.66 expected. Revenues stood at $46.90 billion versus $46.94 billion expected. Apple shares were down about 2 percent at the time of reporting.

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With respect to the number of iPhones sold in the quarter, they reported a sale of 45.5 million units versus 44.8 million units expected. Even with the slight increase, Apple phone shipments still fell 5 percent

Well that said, Apple expects a better next quarter on strong iPhone 7 sales. In a statement earlier today, Apple CEO Tim Cook said “We couldn’t be more excited about the customer response to the iPhone 7 and the iPhone 7 Plus,”

Apple expects revenue of $76b-$78b versus $74.9b at $3.21 per share expected.

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Apple’s new iPhone 7 has received some really great reviews which has seen it dominate new cycles. The iOS 10 has also really played a big role in the increased interest in Apple’s devices. The iOS 10 which came to the iPhone (iPhone 5 and higher) also got some really great reviews too. But perhaps the biggest reason for the higher sales projection by Apple is the absence of what some have called the best Android phone ever, the Samsung Galaxy Note 7. Note 7 phones started catching fire 2 weeks after launch and a recall and replacement haven’t reversed the trend. This led to a halt in production of the phones. That may have been a Christmas gift to Apple and Google which launched the Pixel recently too.

Apple is also focusing on its services which have continued to impress investors. Back in April when Apple first recorded its first quarterly drop with respect to revenue in 13 years, it still reported an upbeat service revenue. Apple services include the App Store, Apple Care, Apple Pay, Apple Music and the Cloud. Services showed an increase in revenue. Back in April, revenue from Apple’s service now stands at $5.99b/ which represents a 20 per cent year on year increase. In this quarter, revenue from Apple services stood at $6.33b versus $6.11b — a 25% year-over-year increase and this is the first time it will be going above the $6b mark.  Tim Cook in an address said Apple’s services business could  become the size of a Fortune 100 company in fiscal 2017.

In other news, Apple now has $75.4B in long-term debt, almost 1/3 its cash reserves and 91% of Apple’s cash is overseas. It also has over $240b in cash reserves.