Shares in Apple Inc (NASDAQ:AAPL) lost a few pips today after a disappointing trading update from the iPhone seller after-hours last night.
In early morning trading in New York, Apple shares were down 2% at US$144.50 after the world's biggest company in terms of market capitalisation surprised the market with a dip in sales of its sacred cash cow, the iPhone.
In the three months to 1 April – All Fools Day – Apple sold 50.76mln iPhones, down from 51.19mln in the same period of last year.
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Analysts had expected sales of 52.27mln, but it seems that some potential customers are holding off upgrading their current Apple smartphone until the next model comes out, probably in September of this year.
Revenues rise despite a 14% fall in sales in China
Despite the fall in iPhone sales, the electronics titan still managed to increase revenues from a year earlier in what was the second quarter of the company's fiscal year.
Revenue rose 4.6% to US$52.90bn, though this was below the US$53.02bn analysts had been expecting.
Revenue from China was down 14% year-on-year.
The company said it expects revenue in the current quarter will be somewhere between US$43.5bn and US$45.5bn, which was less than what analysts had been expecting.
Apple chief executive Tim Cook suggested in a conference call to analysts that the Apple faithful that there is currently “a pause in purchases” of the iPhone.
Cook says the company believes the pause is “due to the earlier and much more frequent reports about future iPhones” by the company's committed band of cheerleaders in the media.
The hysteria from the evangelists is even more hyperbolic than it usually is because this year marks the tenth anniversary of the company's flagship product.
Services revenue disappoints a little while the iFad continues to wane
Of possible more concern to Apple's management was the slightly below par figure for Services Revenue from those locked in to Apple's heavily barricaded ecosystem.
Revenue from the App Store, Apple Pay and the like clocked in at US$7.04bn, which was up from US$6bn the year before but a tad below the US$7.06bn Wall Street had pencilled in.
Sales of the iPad – dubbed the iFad in some quarters - continued to decline, falling 13% from a year earlier to 8.92mln units.
Net income rose to US$11.03bn from US$10.52bn the year before.
Earnings per share of US$2.10 were ahead of market expectations of US$2.02 and were up 10.5% from US$1.90 a share the year before.
“The rising competition in China, which caused 14% decline in revenues from the world’s biggest emerging market, and Samsung’s return to the race with its well-noted Galaxy S8 raise questions regarding the much expected iPhone 8’s ability to foster a suitable revenue growth in the coming quarters,” suggested Ipek Ozkardeskaya, senior market analyst at LCG.
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