Apple: Revenue will be lower due to China (updated)

The US mobile phone manufacturer Apple (AAPL) has lowered its forecast for the fiscal-first quarter revenue outlook due to the China market. Apple says that it expects the revenue to be 84 billion dollars in the quarter. According to Bloomberg estimates, the revenue expectation was 91,3 billion dollars in average.

– While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad, Apple´s CEO Tim Cook said in an investor letter on Wednesday.

According to Cook, the other figures “remain broadly in line with our earlier estimates”. He also pointed out, that the revenue stream outside of the iPhone grew almost 19 % year-on-year. For example Wearables grew almost 50 % on annual basis. Also the services generated over 10,8 billion dollars during the quarter and according to Cook the company is on track to achieve its goal of doubling the size of this business from 2016 to 2020.

In spite of the cutting forecast, Cook expects to set all-time revenue records in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands and Korea. – And, while we saw challenges in some emerging markets, others set records, including Mexico, Poland, Malaysia and Vietnam, he added.

Apple´s stock fell in after-hours trading about 7 % to 147 dollars.  Apple is to publish its final first fiscal quarter, ended 29th December 2018,  on the 29th January 2019.

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Apple in the economic unstability -sales fell

Apple´s (AAPL) second quarter net sales were 50,5 billion dollars compared to 75,8 billion dollars in the previous quarter. Net sales were hit by declining sales of iPhones, but also other iproducts. For example the sales of AppleWatches showed declining trend.

International sales accounted for 67 percent of the quarter’s revenue and the global economic unstability was showing in the figures. All the major sales areas were showing declining trend, also the Greater China. The sales in Japan were more stable.

– Our team executed extremely well in the face of strong macroeconomic headwinds, said Tim Cook, Apple’s CEO in the press release.

– We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices, he continued.

The services sector showed 20 per cent increase annually but 1 per cent decline from the previous quarter. This sector includes for example the Apple Care and Apple Pay -services. This is also one of the areas the Finnish Nokia announced yesterday a small acquisition with healthcare it-company.

Apple is estimating that the revenue for the third quarter would be between 41-43 billion dollars and the gross margin between 37,5 – 38 percent, while it has been 39,4 percent in the second quarter.

So, Apple is not expecting any big changes in the economic outlook for this year and the company said that it is focusing on R&D, but also acquisitions. The company share fell 8,5 percent to 95,51 dollars after the report.

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Apple sold 47,5 million iPhones – sales fell in China

Apple (AAPL) sold 47,5 million iPhones during the last quarter ending in June. According to the company the revenue during that period was 49,6 billion dollars and net profit was 10,7 billion dollars, 1, 85 dollars per share. 64 percent of the sales came from international markets.

According to the company guidance for the fiscal 2015 fourth quarter, Apple expects the revenue to be between 49 and 51 billion dollars and gross margin between 38,5 and 39,5 percent.

The sales in China fell during the third quarter to 13,2 billion dollars compared to 16,8 billion dollars a quarter earlier. This is a clear sign of the Chinese markets economy slowdown.

– We generated very strong operating cash flow of 15 billion dollars and we returned over 13 billion to shareholders through our capital return program, the company said in the statement.

During the reported period Apple also increased its R&D expenses to 388 million dollars compared to 313 million dollars year ago. Also the cost of sales rose to 148 million dollars compared to 115 million dollars year ago.

Apple is not publishing its Apple Watch figures but the company states in the press release that they are very confident and happy about the market debut. The company is also going to launch its Apple Pay in the UK during the couple of weeks.

The company share fell to 130,75 dollars, down 1,0 percent in New York.

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