Apple Q2 sales spiral downwards
Apple's second quarter is dubbed as disappointing, but Apple Services provide financial boost
Apple released its financial results for its fiscal 2016 second quarter, and though financially Apple is not in the hole, it is the worst fiscal quarter since 2003.
In its first quarter of 2016, Apple CEO Tim Cook hailed the iPhone, Apple Watch and Apple TV as the ‘world's most innovative products' as first quarter financial results revealed a record-breaking revenue of $75.9bn.
However results showed its second quarter did not come close. Apple posted quarterly revenue of $50.6bn and quarterly net income of $10.5bn, or $1.90 per diluted share.
In terms of product sales, Apple sold 51.2m iPhones in its second quarter, when compared year-on-year, this is down from 61.1m. The figure is also lower compared to Q1 2016, which exceed expectation due to the release of the iPhone 6S and 6S Plus during the festive period, where sales reached 74.8m.
Related: In pics: Apple's 2016 financials
iPad sales also took a hit, as Apple only sold 10.3m devices compared to 12.6m last year. Furthermore, Mac sales were slightly low, with Apple selling 4m units compared to 4.6m in the same quarter last year.
Despite these figures, Apple's latest releases, which include the iPhone SE and the iPad Pro 9.7, could boost sales in the third quarter. Plus, with Apple's 10th version of the iPhone to be unveiled later this year, sales could perhaps improve.
"We had a very busy and challenging quarter," CEO Tim Cook said on a conference call with investors. "Despite the pause in our growth, the results represent excellent execution by our team in the face of strong macroeconomic headwinds."
Nevertheless, it's not all doom and gloom. Apple's figures revealed services, such as AppleCare, Apple Pay, and licensing, grew 20% to $5.99bn compared to last year, which set a new record for the company. Sales of other products, which includes Apple TV, Beats and Apple Watch, also increased from last year, bringing in $2.2bn revenue, which was up from $1.7bn in 2015.
"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," added Cook.
Apple also announced that its board of directors had authorised an increase of $50bn to the company's program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of $250bn of cash by the end of March 2018.
"We generated strong operating cash flow of $11.6bn and returned $10bn to shareholders through our capital return program during the March quarter," said Luca Maestri, Apple's CFO. "Thanks to the strength of our business results, we are happy to be announcing today a further increase of the program to $250bn."
Apple also provided its expectations for its fiscal 2016 third quarter, which foresees revenue between $41bn and $43bn, where gross margin will be between 37.5% and 38%. Apple predicts operating expenses will be between $6bn and $6.1bn and other expenses will cost roughly $300m. Finally, Apple believes there will be a tax rate of 25.5%.