Wednesday, July 27, 2016

The Exchange welcomes Apple’s performance, despite a decline in iPhone sales – Les Echos

This is still not good, but less terrible than expected. Sales of Apple and its iPhone sales continue to decline for the second consecutive quarter, but figures released Tuesday by the California company are better than predicted by analysts. So, the markets reacted positively to the earnings release, Apple’s stock earning 7% in trade following the close of the NYSE.

After a first down for thirteen years between January and March 2016, sales of Apple continued to decline in the three months ending in late June. This 15% decline is related to the decrease of 15% of iPhone sales, Apple’s flagship product which accounts for two thirds of its revenue and most of its profits. Its profit has therefore suffered, falling 27% to $ 7.8 billion.

The firm Apple is facing a saturation of the smartphone market in developed countries, where the phones renewal cycle slows. She barely together to make China a real growth driver. The 33% fall in sales in the country, as well as Taiwan and Hong Kong, is even more severe than the previous quarter. If Luca Maestri, Chief Financial Officer of Apple, explained by “a difficult macroeconomic environment “, these poor results are also due to increased competition from local players like Huawei, Oppo and Vivo, positioning themselves increasingly on the premium segment occupied by Apple.

The CEO of the company, Tim Cook, however, expressed his “optimism” during a conference call with analysts, citing “several encouraging signs” . First, the iPhone OS, the new model introduced in late March, taking over the design of the iPhone 5, with the power and features of 6, has a “excellent start” . Its modest price – it starts at $ 399, against 649 for the iPhone 6S – however, increased the average price of iPhone from $ 662 to $ 595 sales, eating into the margins of the group, which fell to 39, 7% to 38% this quarter. The launch of a new more expensive model, the iPhone 7, expected to be unveiled in September, could help rebalance the accounts.

Decline “hardware”

Tim Cook has especially expressed his satisfaction with the growth of 19% revenues from the sale of services. They now represent 11% of the turnover of the group, against 8% last year, driven in particular by the App Store, where revenues increased by 37%, “a record in the history of our society “, he said. Sales of all other “hardware” products continue, them to retreat. Purchases of Mac computers are down 11% and 9% of iPad, even if for the first time in 10 quarters, revenue from tablet sales rose thanks to strong sales of the iPad Pro , a more expensive model for businesses. The last bet of the group, the Apple Watch, do not encounter on him successful. If Apple does not disclose exact figures, the division in which the sales are recorded shows connected accuses the quarter a net decrease of sales (-16%). The IDC research firm had estimated last week that they had plunged 55%.

Anaïs Moutot, Les Echos
Correspondent in San Francisco

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