Apple’s Sales Rise as iPhone Slumps

Article By : Dylan McGrath

Revenue from iPhone slipped to less than 50% of Apple's sales for the first time in a quarter since 2012. Despite that, corporate revenue was actually up a bit.

SAN FRANCISCO — Apple’s iPhone receipts declined by 12%, accounting for less than half of the company’s revenue in the fiscal third quarter. But despite the slumping iPhone sales and the effects of an ongoing trade war between the U.S. and China, Apple’s overall sales improved slightly compared to the year-ago quarter thanks to growth in wearables and services revenue.

Apple sold $26 billion worth of iPhones in the fiscal quarter, accounting for 48% of the company’s total sales. It was the first time in any quarter since 2012 that the iPhone didn’t represent the majority of Apple’s sales.

Apple to Buy Intel’s Modem Business for $1 Billion

The fiscal third quarter — which closed June 29 — marked the third straight decline in iPhone revenue for Apple. In a conference call with analysts following the quarterly report, however, CEO Tim Cook played up the improvement in year-over-year sales as compared to the previous quarter, when iPhone revenue declined by 17% year-over-year. 

The fiscal third quarter has consistently been the slowest for iPhone sales over the past several years. Apple has seen sluggish sales of iPhones in recent quarters and has slipped behind Huawei in the No. 3 position in smartphone sales worldwide. 

Meanwhile, sales of smartphones are projected to decline again in 2019 amid a trade war between the U.S. and China and the Trump Administration’s ban on U.S. companies selling components to Huawei. Last month, market research firm Canalys cut its forecast for smartphone unit shipments worldwide to 1.35 billion units, a decline of 3.1% compared to last year. 

Cook said last week’s announcement that Apple will pay about $1 billion to acquire the majority of Intel’s smartphone modem business would mark Apple’s second-largest ever acquisition in dollar terms and largest in terms of staff, about 2,200 employees.  

“We see this as a great opportunity to work with some of the leading talents in this field, to grow our portfolio of wireless technology patents to over 17,000, to expedite our development of our future products and to further our long-term strategy of owning and controlling the primary technologies behind the products we make,” Cool said. 

Apple’s total sales for the quarter amounted to $53.8 billion, up 1% from the third quarter of fiscal 2018. The company reported a net profit of $10 billion, down 13% from the year-ago quarter. 

Revenue set an all-time high for Apple’s June quarter. Cook credited an all-time high in revenue from services and accelerated growth from sales of wearable electronics products, including the Apple Watch and Air Pods.  

Excluding iPhone sales, Apple’s fiscal third quarter revenue was up 17% year-over-year. Services revenue came in at $11.5 billion for the quarter, up 13% year-over-year. Sales of wearable electronics were up 48% year-over-year to more than $5.5 billion. 

Sales of iPads were also up for the third straight quarter, increasing 8% to reach more than $5 billion. iPad sales are up more than 15% year-to-date, Apple said. 

Mac revenue increased 11% year-over-year to reach $5.8 billion. “Mac revenue grew in four of our five geographic segments and set June quarter records in the U.S., Europe and Japan, as our overall performance significantly outpaces the global PC industry,” Cook said. “Nearly half of the customers purchasing Macs during the quarter were new to Mac, with revenue growing in both developed and emerging markets and the actices installed based of Macs again reached a new all-time high.” 

For the current quarter, which closes at the end of September, Apple said it expects sales to increase to between $61 billion and $64 billion, exceeding the consensus analysts’ forecast. 

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