Apple′s profits slump but experts still upbeat | News | DW | 26.10.2016
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Apple's profits slump but experts still upbeat

Tech giant Apple made $9 billion in the third quarter of 2016, marking a 19 percent drop mostly due to slumping iPhone sales. Analysts foresee growth near year's end, possibly boosted by Samsung recall troubles.

Global iPhone sales fell for the third quarter in a row, according to the latest numbers published on Tuesday for the three months preceding September 24.

Apple sold 45.5 million phones during that time, which is five percent less than in the same period last year. The drop is bad news for the company, as the iconic line of cell phones accounts for around two-thirds of Apple's revenue. However, the latest data includes only two weeks worth of sales for the iPhone 7 and 7 plus models that were launched in September.

The US-based company also noted growth in services such as iTunes, the App Store, and Apple Pay.

Chief Executive Tim Cook said the third quarter results were "strong."

"We're thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record," he said in a statement.

Apple's shares fell 2.8 percent in the hours immediately after the Tuesday announcement.

Trouble in China

The results also showed a six percent drop in iPad sales and 14 percent decline for Mac computer sales. In total, profits fell 19 percent compared to the same three-month period last year, reaching $9.01 billion (8.28 billion euro). The company is especially hurting in the so-called Greater China region, which includes Mainland China, Hong Kong, Macau and Taiwan. Revenue fell almost 30 percent in the third quarter of 2016, following an even larger drop in the months before.

"In essence, in China and elsewhere, while Apple's products are still seen favorably, the distance between Apple and its competitors is nowhere near as great as it once was," Neil Saunders, head of retail research firm Conlumino, wrote in a note cited by the Reuters news agency.

However, the company pointed to a 10 percent rise in revenue in Japan and gains in other global markets..

Exploding phones to pave Apple's way

A number of analysts also expressed confidence that Apple's profits and revenue would climb in the final quarter of 2016, noting that customers traditionally buy more iPhones in the run-up to and during the holiday season. Analysts estimate that the company would sell around 75.8 million iPhones in the current quarter, more than 30 million more units than in the previous quarter, according to FactSet.

Also, Apple might gain ground on its rival Samsung near the end of the year. The South Korean cell-phone maker is still reeling from embarrassing recalls of its Galaxy Note 7, after it was discovered that Samsung's flagship model could explode or catch fire.

Apple is also set to reveal a new Mac later this week, hoping to boost consumer interest.

dj/gsw (AFP, AP, Reuters)

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