Apple core product is struggling under the economic crux, which accounts for two-third of its revenue.
The hot discussion on Apple’s earnings, declared on Tuesday, was the slow growth of iPhone sales. Without a doubt, the recent economic crunch has hit the high technology behemoth too. In 2016, the sale of world most popular handset rose by less than 1% in comparison to the past year’s same period.
Despite the slowing growth in sales, the $555 billion company declared earnings of $18.4 billion; the expected profit was $18.22 billion. It made revenue of $75.9, which fell short as compared to the expected revenue of $76.67 billion; unanimously projected by Thomson Reuters’ analysts. Apple has been reported to have sold 74.8 million iPhones in last quarter. The fact that it could not boost the sales over “holiday season” is alarming.
It is the first time since the release of Apple wondrous product, “iPhone” in 2007. Also, last year, when it introduced a new version of the handset with larger-screen, the sales escalated. iPhone sales make up to two-third of the company’s revenue and any halt in its sales will decelerate the company’s growth. Apple’s other core products – iPad and Mac – did not have soaring sales earlier. Both witnessed a fall in sales by 25% and 4% respectively.
Many critics expressed that the latest and upgraded iPhone 6S was a minor upgrade and it could not stand firm in the mature smartphone market. The company views many external factors too, which hindered the sale of the handsets. The fluctuating currency rates have high effect on the overseas market. For instance, the high dollar rates would have discouraged the consumers’ purchasing power.
The suppliers have noted the decline in iPhone 6S orders. The handset’s sales in 2016 do not look promising either. Not a long time ago, Apple entered in China and generated hefty revenue but the “soft economic growth” of Asian superpower is a deterrent in the continuing growth of the company.
The sales in China grew by 14% to $18.37 million, which was down as compared to the sales that grew by 84% in fiscal year ended in September 2015. However, not all is bad for Apple as its “other products” including Apple Watch, Apple TV, and Beats accessories generated the revenue of $4.4 billion; going up by 62%. Moreover, the whopping $18 billion quarterly profit is the highest and the best for any public company – going up by 2%.
The world’s leading high-tech corporation anticipated that in the next couple of quarters, its revenue might fall close to $50 billion. The reason can be the that it puts more focus on its anticipated project; a self-driving car dubbed under the name ‘Project Titan’, but the project will not be uncovered until at least 2019, according to Wall Street Journal. As of now, the investors and analyst are setting their eyes on the Californian company for its latest iPhone 7 expected to be released in the mid of 2016.
Apple’s stock came down at $99.99 at the market close on Tuesday. Many analyst pundits feel that the stock is highly undervalued. They have anticipated the price target at $179.
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