Apple
shares are sliding in late trading Thursday after the company posted a 1% decline in sales from a year ago.
A strong performance from the company’s services segment was offset by disappointing sales of iPhones and iPads.
The company also suggested on its earnings call that performance could be slightly disappointing in the September quarter.
In late trading, Apple shares are down 2.3%.
For the quarter ended July 1, Apple reported revenue of $81.8 billion, down 1% from a year ago, and about in line with the Wall Street consensus forecast of $81.9 billion. Profits were $1.26 a share, above the Street at $1.19.
iPhone sales were $39.7 billion, down 2.4%, and a little shy of the Wall Street consensus forecast of $40.3 billion. Mac sales were $6.8 billion, above estimates of $6.6 billion, but down 7.3% from a year earlier. iPad sales were $5.8 billion, well below consensus of $6.5 billion, and down 19.8% from a year earlier. Sales in the wearables, home, and accessories segment were $8.3 billion, in line with estimates, and up 2.4% from a year ago.
Services was the standout segment in the quarter, generating $21.2 billion in sales, above the consensus estimate of $20.8 billion, and up 8.2% from a year ago. The company said it now has more than 1 billion paid subscriptions across its services offerings.
On the company’s earnings call, CEO Tim Cook said the company continued to see an “uneven macroeconomic environment.” He also noted that revenue was reduced by four points from currency headwinds, consistent with the company’s guidance.
Chief Financial Officer Luca Maestri said on the call with analysts that the company sees September quarter revenue performance to be comparable to the 1% decline in the June quarter, which would be slightly worse than Wall Street had expected.
Maestri sees two points of headwind in the quarter from negative foreign exchange rates. Maestri said he expects iPhone and Services to accelerate from the June quarter, but he added that both Mac and iPad sales would likely be down double digits from the year-ago quarter.
He said the company sees gross margin in the quarter in the 44% to 45% range, comparable to the 44.5% reported for the June quarter.
Maestri added that the company bought back $18 billon of stock in the quarter. Apple finished the period with $57 billion in net cash. The company continues to target a long-term net-cash neutral position.
Greater China sales held up well in the quarter, increasing 6.7% to $15.8 billion, well above Street estimates of $13.6 billion, and accounting for just under a fifth of all sales in the quarter. From a geographic perspective, the weak spot was the Americas, down 5.5% to $35.4 billion, and well shy of consensus at $38 billion.
In reporting March quarter results, Apple CFO Luca Maestri had said June revenue performance would be comparable to the March quarter, which was down 2.5% from a year earlier. Maestri said at the time that currency would reduce revenue by about four percentage points, and that the services business would continue to face macroeconomic headwinds in digital advertising and gaming.
Write to Eric J. Savitz at [email protected]
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