Sales of Iphone has been slowed down..
Apple has been on the top of the world as the most valuable corporation for some time now and the prime reason behind this is iPhone. The smartphone was an instant hit with the release of iPhone 4 and 4S versions among the masses all across the globe with its stylish design, excellent features and essential add-ons to the market products available at that time. The company soared to the new heights of success with this release and has been on top ever since. But even the sales of this classic release has its limits. In the recent times not only the sale of iPhones has decline but company’s other product lines have also shown some sluggishness. The only product that has shown some significant amount of growth in the recent quarters is Apple Watch and it is categorized among the other products by the brand. These trends add more to the discomforts of investors of the brand across the globe.
A few days ago the corporation displayed its numbers for the fiscal first quarter indicating a rise of less than 1% sales of iPhone from previous year, which is the slowest ever year-year rate of growth for this device. The revenue of the company is primarily based on this device, two-thirds of it to be precise. Moreover, the forecast for the sales does not show any encouraging signs either as the downward trend will continue which will happen for the first time in more than a decade. The figures clearly show that the brand has matured under Tim Cook and is now entering its slow growth period. Another indication is that the company has not been able to introduce a blockbuster device ever since the iPhone 4 and 4S.
This slow growth and declining revenues has raised a few questions in the minds of the investors while on the other hand consumers require cutting-edge innovation from the company. Some of these investors are already starting to consider the brand like a value stock instead of growth stock due to the fact that the company shows predictable results rather than explosive growth. The value of the shares has also retreated by 11% from previous year. For the quarter that ended in December of 2016, the compnay sold 74.8 million iPhone devices which is very close to the number of 74.5 million units sold a year ago. The revenue has grown by 1.7% standing at $75.9 billion and the net profit has reached $18.4 billion which was $18 billion in the previous year. As per the company’s chief, Tim Cook the decline is due to the uncertainty associated with global financial and economic markets.
Apple Inc. has projected a revenue from $50 billion to $53 billion for this quarter which ends in March. This is a drop from the previous year’s revenue standing of $58 billion as well as the Wall Street forecast of $55.4 billion. Prior to the announcement of earnings the investors were also showing less confidence on the performance in the quarter based on the lower demands of the latest iPhone models 6S and 6S Plus. Many suppliers of the iPhone components have blamed decline in demand due to recent below expectation financial performance. In accordance with the CFO of Apple, Luca Maestri these results are influenced by the strengthening of US Dollar.
Despite the global economic recession or strengthening of US dollar other areas of growth for the corporation have experienced a decline as well. Greater China regional sales raised by 14% a year ago in the same quarter yet the revenue restricted at approximately 70%. The concerning issue here for the stakeholders of the brand is that flattening of the iPhones sales is not covered by company’s other products. iPad sales have also retreated by 25% within a year and the sales of Mac are down by 4%. The positive point here however, is that the company has experienced a growth of 26% in services while the revenue from “other category” which also include Apple Watch, has expanded by 62%. According to Maestri as the company matures it could emphasize its focus on the service business which include Apple Music, iTunes Store and the App Store.