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Quarterly report: Apple’s iPhone revenue fell 21%
Last quarter was not quite typical for Apple. Firstly, in the context of the pandemic, sales of laptops and tablets were actively growing. Secondly, the delay in the release of the iPhone 12 series smartphones caused a reduction in revenue in this strategic direction for the company. Apple representatives are convinced that revenue in the smartphone segment will return to growth in the current quarter.
Image source: CNBC
CEO Tim Cook predictably highlighted positive trends in the third quarter in his opening speech. First of all, the total revenue reached a record value of $ 64.7 billion, although compared to the same period last year, it grew by only one percent. Second, record revenue figures were achieved from the sale of iPads ($ 6.8 billion) and Mac computers ($ 9 billion). Compared to last year, revenue in these areas increased by 46% and 29%, respectively. Apple executives did not hide the fact that the demand for laptops and tablets is maintained at a high level by the phenomena caused by the coronavirus pandemic.
A year ago, iPhone sales accounted for 52% of Apple’s total revenue, but by the end of the third quarter of this year, this proportion fell to 41%. In fact, core revenue decreased over the year by 21% to $ 26.45 billion. Of course, Apple representatives tried at the reporting event to look for positive moments in the current situation, but they did not come up with anything better than to express confidence in the consistently high demand for smartphones of the new family, as well as to remind of the double-digit growth in demand for old models in the first half of September percent. Apparently, it was some kind of “phantom demand”, synchronized with Apple’s traditional schedule for the announcement of new smartphones, which had to be broken this year.
Image source: Apple
The first five days of iPhone 12 sales allow Apple’s management to expect revenue growth from smartphone sales in the current quarter – albeit by no more than 10%, while the company’s revenue from other areas of activity will grow by double-digit percent. Third-party analysts agree that iPhone sales in the current quarter will bring Apple 6.45% more revenue than a year earlier.
Apple’s wearables and accessories business jumped 21% to $ 7.9 billion in Q3, beating analyst expectations. Services brought 16% more revenue. The number of subscribers among users of Apple’s paid services for the quarter increased from 550 to 585 million people, by the end of the year it should reach 600 million people, as the company expects.
Geographic directions behaved differently in the third quarter. In China, Apple’s Revenue Shrinks 29% As Consumers Waited For 5G iPhones, Which Are Highly Developed in China. In the US, Apple’s revenue grew marginally (4.7%), although it continues to represent just under half of the company’s total cash flow. Europe showed good revenue growth (13%), Japan also supported it, other countries of the Asia-Pacific region showed good dynamics (13%). Apple executives are convinced that iPhone sales in China will go up in the current quarter, especially the iPhone 12 Pro Max with a larger display.
Apple representatives had to admit that there are some problems with the supply of components for the production of the iPhone 12, and the company could sell more smartphones than it can now. Laptops, tablets and smartwatches also suffer from the deficit. By the way, Apple ended the quarter with $ 193.8 billion in cash and liquid assets, 7% less than last year. Such a financial “safety net” will allow the American giant to survive whatever adversity Tim Cook referred to in his opening speech in the context of the spread of COVID-19. The company’s shares fell 4%, as investors were confused by both the decline in revenue from sales of smartphones and Apple’s lack of clear forecasts for the current quarter.