Even though Apple just announced another record quarter, it seems like the massive growth story of The iPhone Company is coming to an end. Last quarter Apple pulled in record sales of $75.9 billion and record profit of $18.4 billion, up versus sales of $74.6 billion and net income of $18 billion in the year ago period.
Of course, companies don't trade on past performance so what everyone was looking forward to was the forecast for fiscal Q2 2016. Since the start of 2015, Apple shares are down over 12 percent and it seems investors were right to be cautious as the company is predicting its first sales drop in the last thirteen years. Apple expects second-quarter revenue in the $50 billion to $53 billion range, significantly less than the $58 billion the firm booked in Q2 2015.
Sales of Apple's top-selling products are slumping. Compared with the same period a year ago, unit sales of the iPhone were flat, Mac sales fell 4 percent and iPad sales collapsed 25 percent. On the bright side, revenue of services increased 26 percent year-over-year and revenue of "other" products skyrocketed 62 percent. The other category includes products like the Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.
Especially the flat sales of the iPhone are worrying for Apple's growth story as this device accounts for 68 percent of Apple's revenue, and likely even more of its profit.
Apple® today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.
“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”
“Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment,” said Luca Maestri, Apple’s CFO. “We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program.”
Apple is providing the following guidance for its fiscal 2016 second quarter:
revenue between $50 billion and $53 billion
gross margin between 39 percent and 39.5 percent
operating expenses between $6 billion and $6.1 billion
other income/(expense) of $325 million
tax rate of 25.5 percent
Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on February 11, 2016, to shareholders of record as of the close of business on February 8, 2016.