San Francisco: Apple on Tuesday reported a rise in quarterly profits but its shares took a hit from slow-growing revenues and weaker iPhone sales ahead of a 10-year-anniversary model on the horizon.
Apple said that its profit climbed 4.9% to slightly more than $11 billion on revenue rising 4.6% to $52.9 billion in the quarterly that ended 1 April. Shares of the California-based company were down nearly 2% to $144.65 in after-market trades that followed released of the earnings figures.
“We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus,” Apple chief executive Tim Cook said in the earnings release.
Cook said the company has seen “great” response to new iPhone 7 Red Special Edition models and is “thrilled with the strong momentum of our services business, with our highest revenue ever for a 13-week quarter.” Still, iPhone sales dipped slightly compared with a year ago to 50.8 million units, below most forecast for the key profit machine for Apple.
During a conference call with analysts, Cook said Apple was seeing a “pause” in iPhone purchases that he felt was caused by unconfirmed “reports about future iPhones.” “That is clearly what is going on,” Cook said.
Apple has annually unveiled new iPhone models during special events in September, with major innovations anticipated this year because it will mark the tenth anniversary of the debut of the world-changing mobile device.
Still, the company contended that iPhone sales were better than it had expected, growing in four of its five top markets and skewing toward large-screen iPhone 7 models that have higher margins of profit.
Apple also announced that its board of directors has authorized an addition $50 billion for dividends and buying back shares in the company, raising to $300 billion the total amount of cash to be spent in the program during the coming two years.
While Apple has become the world’s most valuable company, analysts are looking at how the company is diversifying in the face of a saturated smartphone market and increasing competition.
Tuesday’s report showed weaker sales of iPads and Mac computers.
Apple also reported a 14% drop in revenues from a year earlier for “Greater China,” dropping the region behind Europe and the Americas in terms of sales.
A strong US dollar facing off with weaker currencies were blamed for a strong “headwind” that pushed revenue down. Sales of Macintosh computers did well in China, with revenue up about 20%, and the company’s retail shops were attracting visitors in what it saw as a good signal for its business there.
“We continued to believe there is an enormous opportunity there,” Cook said on mainland China. “In the scheme of things, our business is pretty large there.”
Apple is also investing heavily in India, the third largest smartphone market in the world behind China and the US, according to Cook. Apple set a new March quarter revenue record in India, growing by double digits. “We’re very optimistic about our future in this remarkable country with its very large, young and tech savvy population, fast growing economy and improving 4G network infrastructure,” Cook said.
Apple continued to tout growth of revenue from online services or digital content, which it boasted was on its way to be on scale with a Fortune 100 company in terms of revenue. For the second quarter in a row, revenue from Apple services topped $7 billion, the company reported.
While not disclosing exact numbers, executives said Apple Watch sales double from the same quarter last year and touted it as the best selling smartwatch in the world.
Sales of other products, which include AirPods wireless ear pieces and Apple Watch, posted a 31% increase in revenue over the prior year. Combining revenue from Apple Watch, AirPods and Beats headphone sales over the course of the last year would give Apple’s “wearables” offerings the scale of a Fortune 500 company, according to Cook.
Apple’s cash holdings meanwhile rose to a record $256.8 billion, a figure that raises questions for how the company will manage its massive reserves.