• 1 minute Read

The Feel-Good Version Of Apple’s Fourth-Quarter 2016 Earnings

Though sales of the iPhone were down this quarter (as were revenue and profit), there’s reason to believe happier times are coming.

The Feel-Good Version Of Apple’s Fourth-Quarter 2016 Earnings
[Photo: Flickr user Daria Nepriakhina]

With Apple it’s very easy to get hung up on the details, especially the incremental improvements or declines from quarter to quarter. But Apple is the most profitable U.S. company, and even in what’s being seen as a down quarter, the company made $9 billion on $46.9 billion in revenue in its fiscal Q4.

Apple makes more than 60% of its profit on the iPhone, so earnings are tightly linked to release schedules for the device. The key takeaway is that iPhone sales were down, both year-over-year and sequentially, but we’re not talking about crisis-level declines.

And there’s lots of light ahead. The new iPhone 7 and 7 Plus have just made the scene. Tim Cook says he’s seeing strong acceptance in the market, and that supply is still trying to catch up to demand (especially iPhone 7 Plus).

“Demand continues to outstrip supply but were working on getting them into customers’ hands as soon as possible,” Cook said in a call with analysts Tuesday afternoon. He later added: “It’s very hard to gauge demand when you’re selling everything you’re making.”

That bodes well for a strong holiday quarter and beyond. Apple believes it’ll see as big a bump in phone sales as it saw last year with the popular iPhone 6s. Remember, too, that Apple has scaled back the size of its orders from suppliers after the company overestimated demand of the iPhone 6s.

Apple’s CFO Luca Maestri said the company will return to growth in the holiday quarter with revenues between $76 billion and $78 billion. Apple’s holiday quarter set a revenue record, Maestri said.

As iPhone sales cool off, Apple has been working hard on its services business to fill the earnings gap. Cook and company had some good news there, too. The services business has doubled over the past four years. One service, Apple Music, grew 22% year-over-year in the September quarter.

In terms of international sales, Tim Cook said iPhone sales in India were up 50% over the last fiscal year, pushed by LTE cellular service gradually taking hold in the country. The same process is taking place in China, Cook said.

Investors and others are expecting a much brighter quarter for Apple over the holidays, and chances are good they’ll get it.


More Stories