Apple Forecasts Another Revenue Decline Next Quarter

[MacRumors]

Apple today reported its first year-over-year decline in quarterly revenue since 2003, and its guidance for the third quarter of the 2016 fiscal year suggests that the downward trend is likely to continue.

Apple expects third quarter revenue of between $41 billion and $43 billion, which would be up to 18 percent lower than the $49.6 billion in revenue it posted in the year-ago quarter.

The company also expects a gross margin between 37.5 percent and 38 percent, operating expenses between $6 billion and $6.1 billion, other income/expenses of $300 million, and a tax rate of 25.5 percent.

Apple's first revenue decline in thirteen years is largely attributable to the first ever year-over-year decline in iPhone sales, which dropped to 51.2 million from nearly 61.2 million in the year-ago quarter.

iPad and Mac sales also declined to 10.25 million and 4.03 million respectively in the March quarter, compared to 12.62 million and 4.56 million respectively a year ago.

Meanwhile, Apple experienced growth in both its Services and Other Products categories, the latter of which totaled $2.19 billion and includes sales of iPods, Apple TVs, Beats Electronics, and Apple-branded and third-party accessories.

Quarterly revenue from the iTunes Store, App Store, Mac App Store, iBooks Store, AppleCare, Apple Pay, licensing, and other services amounted to nearly $6 billion, up from $5 billion in the year-ago quarter.

The Americas remain Apple's largest market with $19.1 billion in revenue, followed by China where revenue fell rather sharply to $12.5 billion compared to $16.8 billion in the previous March quarter.

Article Link: Apple Forecasts Another Revenue Decline Next Quarter

 

[555gallardo]

The day had to come... On the other hand, this one should been expected.

 

[pcmacgamer]

Gonna have to really innovate to get people to upgrade products yearly. Not surprised much by the drops. The markets for all their product lines are pretty saturated.

 

[RockSpider]

Welcome to the real world Apple, can't say Im sorry.Maybe people are sick of smelling glue and 1.2ghz CPUs and giant bezels.

 

[Fender2112]

To be fair, people are tired of paying a premium for old technology.

 

[nostaws]

They need to innovate new products and services, not just upgrading current ones.

Gonna have to really innovate to get people to upgrade products yearly. Not surprised much by the drops. The markets for all their product lines are pretty saturated.

 

[Chupa Chupa]

​

iPad and Mac sales also declined to 10.25 million and 4.03 million respectively in the March quarter, compared to 12.62 million and 4.56 million respectively a year ago.

So iPad sales declined -- but did the 9.7 price increase over the previous 9.7 model keep revenue flat or up? I know Apple doesn't break out by model but the 9.7 is the only fresh one this Q so sales of that model are bound to eclipse the others. Plus IIRC its traditionally been the most popular size.

 

[LordBeelzebub]

This happens to most companies. A company creates a hit product, they ride the the wave of success and popularity for awhile, then their product becomes common and ordinary and the success and popularity fades away.

Now the question is, will Apple fade away or create another amazing product? Needless to say Apple has been riding the successful wave of the iPhone for long enough, touch screen smart phones are common place now, Apple isn't the only company making them, so they can no longer rely on the iPhone to fuel their successes.

Sorry Apple, you need to do something or put a for sale sign on that new campus already.

 

[69650]

Apple have been taking their customers for granted for too long and it's coming back to bite them in the ass now.

 

[kas23]

And with Apple geared to release an iPhone 6SS next Fall, numbers are going to continue to be grim for awhile. They like to blame it on a "poor economy", but they (i.e. Jobs) weathered the last recession fairly well. I like him, but unless they have an ace up their sleeve (which I doubt they do), Tim Cook is not likely to survive this downturn.

 

[BondiBlauw]

People expect way too much from the company. Revenue will always go up and down and new Apple products will continue to come and go.

Their best work (in the public domain at least) is here now.

I am in love with the next release as much as anyone else. But in the mean time, I fully intend to make good use of my favourite apps and the iPhone 6 I maximise use of every day.

I keep in contact with those most important to me, (Phone, Messages, Facebook) / Networking with future clients for film projects, (Email, Calendar) / Getting from A to B in record time on my motorbike, with Siri alerting me about traffic ahead (Maps) / Shooting short films and music videos in glorious anamorphic (Movie Pro) / And a million and other cool things!

If you keep yourself busy, getting out and using your incredible devices (no matter what generation they are) the next big thing will arrive sooner than you have time to think.

Go live life, doing all the important, cool, awesome things that Apple have encouraged the world over at least Since Steve arrived back in 1997.

Live now, capture and create. These are the most pressing moments to enjoy now, not tomorrow.

 

[Karma*Police]

Apple have been taking their customers for granted for too long and it's coming back to bite them in the ass now.

I don't think that's it judging by their customer loyalty and Android switcher rates. They just haven't created anything compelling enough recently to capture the imagination of the masses. I can see a mature Apple Watch filling the void at some point and within the next few years, possibly VR, and of course, Apple Car.

Apple still made $10B in profit so it's not like this is a sinking ship. Far from it. These next few quarters have more to do with very difficult YoY comparisons and maturing markets but there's plenty of opportunity ahead.

 

[itsjustmeee]

I'm far from an Apple basher, and for many many years I'd have put myself way more into the fanboy category. But this news doesn't surprise me at all. Apple has really lost it's sparkle lately. And from what I can see, the old Steve Jobs magic is gone. I knew there was trouble as soon as I saw the Apple Watch and didn't want it. It's the first Apple product that I thought was ugly and didn't have the refinement that they've been known for. It's half baked in my humble opinion. At times I honestly wish that I wasn't so deeply entrenched in the Apple ecosystem. The Android phones and watches are actually looking better and better to me. Damn.

 

[Amplelink]

I don't think that's it judging by their customer loyalty and Android switcher rates. They just haven't created anything compelling enough recently to capture the imagination of the masses. I can see a mature Apple Watch filling the void at some point and within the next few years, possibly VR, and of course, Apple Car.

Apple still made $10B in profit so it's not like this is a sinking ship. Far from it. These next few quarters have more to do with very difficult YoY comparisons and maturing markets but there's plenty of opportunity ahead.

Right. The armchair commentators are out in full force. We forget that there was huge pent up demand last year for big screen iPhones. And this is an "S" year. Put those two factors together and of course revenue will fall YoY.

 

[campyguy]

Perhaps this "forecast" will push the stock price down, and then Apple will scoop up scads of stock with a bond offering...

OTOH, my business's Apple budget for the rest of this year isn't going to be spent on already-outdated tech. Give me USB-C, better graphics and Xeon processors, and less in-the-cloud crap. I don't want my employees connected to the cloud - I want them connected to their workstations!

Everybody I know or work with is waiting for the Mac refresh relative to ports and graphics (same goes for the PCs I want for the office) or an iPhone 7. I only went for a 6S in January because of the BOGO promotion by ATT/BB plus the $200 of BB gift cards - the 6S should serve me well tho' for awhile.

 

[chromite]

This happens to most companies. A company creates a hit product, they ride the the wave of success and popularity for awhile, then their product becomes common and ordinary and the success and popularity fades away.

Now the question is, will Apple fade away or create another amazing product? Needless to say Apple has been riding the successful wave of the iPhone for long enough, touch screen smart phones are common place now, Apple isn't the only company making them, so they can no longer rely on the iPhone to fuel their successes.

Sorry Apple, you need to do something or put a for sale sign on that new campus already.

Little bit dramatic.

 

[Karma*Police]

I'm far from an Apple basher, and for many many years I'd have put myself way more into the fanboy category. But this news doesn't surprise me at all. Apple has really lost it's sparkle lately. And from what I can see, the old Steve Jobs magic is gone. I knew there was trouble as soon as I saw the Apple Watch and didn't want it. It's the first Apple product that I thought was ugly and didn't have the refinement that they've been known for. It's half baked in my humble opinion. At times I honestly wish that I wasn't so deeply entrenched in the Apple ecosystem. The Android phones and watches are actually looking better and better to me. Damn.

As someone who purchased a lot of Apple 1.0 devices, including iPod, Newton MessagePad, iPhone and iPad, I would disagree with you. I think Apple Watch is the most polished 1.0 device they've ever made.

It took iPhone 3-4 years before it really took off. The original iPhone was slow, lacked some basic features and had no 3rd party apps but look where it is today.

Let's give Apple Watch a few more years. I think you'll be surprised how far tech can progress in a very short time.

As for Android stuff looking better, you should just buy it and satiate your curiosity. You may become a convert. Or, like most people, you'll probably conclude it's not so great and return to the Apple ecosystem. After all, there's a reason why millions of Android users are switching or switching back to iOS. Either way, you won't have to keep wondering. I carry an iPhone and HTC and I personally find the Android experience to be sub-par.

 

[Col4bin]

Apple's prior iPhone success has bred complacency. Dont believe me, look for the iPhone 6SS coming this Fall. All rumors point to the same form factor again with spec-bumped features only.

 

[nikespex]

I think Apple Watch is the most polished 1.0 device they've ever made.

It took iPhone 3-4 years before it really took off. The original iPhone was slow, lacked some basic features and had no 3rd party apps but look where it is today.

Karma, as someone who purchased the original iPhone it may have been a bit slow at launch, but it still felt like an amazing device that was leaps ahead of anything else at the time. Improvements to the OS were swift, with the App store debuting one year later and all of a sudden my phone did all kinds of new things. That year also saw the 3G support in the new model to fix some of that network slowness in the original phone.

Contrast that with my Apple Watch. A year later there have been revisions to the OS, but I find it hard to see any meaningful improvements. There are glaring holes in the apps that ship with the watch that still are not fixed a year later. It's as though Apple released this immature product and then left it to gather dust.

I've been an Apple fanboy for more than a decade, but I have to agree with others who say the sparkle is gone. Too many products and variants of each product. I would love for Apple to go back to making a few really great things and bringing real innovation and quality to those few things.

 

[joekun]

With phone subsidies going away this trend will only accelerate. For the first time this year it is a better prospect for me to keep my 6+ than to move to an iPhone 7. My phone bill remained the same but the subsidy is gone. I think if they want to keep selling iPhones they need to get away from the phone companies somehow. Whether that means MVNO or something else I'm not sure.

 

[Bustycat]

Another thinnovation for revenue is coming.

 

[apolloa]

Wow! An 18% drop in one quarter!!! If I were the builders of their new Polo mint campus I would be checking Apple can still afford it!
That is one massive drop, if that turns to reality the shares will be hit.

 

[merkinmuffley]

Apparently recycling what is basically the same product in different colors is not a great marketing strategy. Unfortunately, we expect innovation from Apple - and it's not happening under Cook.

 

[Karma*Police]

Karma, as someone who purchased the original iPhone it may have been a bit slow at launch, but it still felt like an amazing device that was leaps ahead of anything else at the time. Improvements to the OS were swift, with the App store debuting one year later and all of a sudden my phone did all kinds of new things. That year also saw the 3G support in the new model to fix some of that network slowness in the original phone.

Contrast that with my Apple Watch. A year later there have been revisions to the OS, but I find it hard to see any meaningful improvements. There are glaring holes in the apps that ship with the watch that still are not fixed a year later. It's as though Apple released this immature product and then left it to gather dust.

I've been an Apple fanboy for more than a decade, but I have to agree with others who say the sparkle is gone. Too many products and variants of each product. I would love for Apple to go back to making a few really great things and bringing real innovation and quality to those few things.

I think the problem is people keep comparing everything Apple does now with the iPhone. If they keep doing that, the sparkle will most likely never come back because disruptive innovations like that come along so infrequently... We were very fortunate to have witnessed and to have been a part of that.

Apple introduced some amazing innovations recently (3D/Force Touch, Touch ID, Apple Pay, hand off, Swift, Apple Pencil, the new iPad Pro display, ATV4 remote/UI, cutting edge designs copied by their competitors, etc.)... no other company comes close and yet people yawn because they're super jaded and expect some kind of revolutionary device with each and every keynote.

Apple Watch is only a year old and it has a different, more limited purpose IMO; quick interactions and biometric data. So unlike a general computing device like the iPhone, it has more limited appeal out of the gate.

But as the Watch gets faster and includes more biometric sensors and features like GPS, more people will find reasons to own one... Just like the iPhone.

 

[Val-kyrie]

Apple ... suggests that the downward trend is likely to continue.

So does this mean Apple will announce new Macs at WWDC but will not release them until Q3? I would not expect a downward trend in sales for Q3 if a new Mac lineup is being released.