Apple cheers investors with better-than-expected sales

A drop in iPhone sales at the beginning of 2016 triggered that fall and while the latest figures were still down on the same period past year, Apple performed better than anticipated to report net income of $7.8bn (£5.9bn).

Apple’s services business, which includes the App Store, Apple Pay, iCloud and other services, boosted revenue by 19% to almost US$6bn.

Speaking on a conference call after the results were announced, Apple CEO Tim Cook struck a buoyant tone and dismissed concerns that sales of the iPhone 7 would be sluggish, even though that device is expected to offer no more than a modest update on last year’s models.

“In the last 12 months, our services revenue is up nearly $4 billion year on year to $23.1 billion, and we expect it to be the size of a Fortune 100 company next year”, Cook said. The brightest spot in Apple’s performance was its services business, which includes its App Store, iTunes, and Apple Pay, among others. Global sales accounted for 63 percent of the quarters revenue. Worldwide, only Samsung sells more smart phones than Apple. “So we’re investing, and the number one thing is that our products work well with other developers’ products, like Pokémon, and that’s why you see so many iPhones in the wild out there chasing Pokémons”.

For next quarter, Apple predicted revenue between $45.5 billion and $47.5 billion, with a gross margin between 37.5 percent and 38 percent. “Mac continues to gain a high percentage of new customers and our Mac install base has grown to a new all-time high at the end of June quarter”, added Cook. Quarterly revenue was $42.36 billion, down from $49.60 billion in the year-ago quarter, a drop of 14.6 percent. In the previous quarter (Q2FY16), the company posted total revenues of $50.6 billion and indicated a lower revenue guidance of $41-43 billion for Q3FY16 amid slowing device sales.