You will be redirected back to your article in seconds

Apple Revenue Falls on 5% Lower iPhone Unit Sales

Tech company forecasts stronger December quarter on iPhone 7 demand

Apple edged out earnings estimates for the quarter ended Sept. 24, even as the tech giant posted its third straight quarterly drop in revenue on lower sales of its flagship iPhones.

The company reported revenue for the September quarter of $46.9 billion — down 9% year over year — and net income of $9 billion, or $1.67 per share, versus net income of $11.1 billion ($1.96 per diluted share) in the year-ago quarter. Wall Street had forecast revenue of $46.9 billion and EPS of $1.65 per share.

Shares of Apple were down about 2% in after-hours trading Tuesday, after closing at $118.25 per share (up 0.5%).

Apple sold 45.51 million iPhones in the quarter, in line with analyst expectations, down 5% compared with the year-earlier period; iPhone revenue dropped 13% year over year, to $28.2 billion.

The company on Sept. 16 began shipping the new iPhone 7 and 7 Plus — which are water-resistant and don’t have a traditional headphone jack — so the quarter included just two weeks’ worth of sales for the new models. Unlike in years past, Apple did not release initial weekend sales for the iPhone 7.

“We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24% to set another all-time record,” Apple chief Tim Cook said in announcing the results. The company’s Services segment, which hit $6.3 billion in quarterly revenue, includes iTunes, AppleCare, Apple Pay, licensing and other services.

Apple issued a more bullish forecast for the current quarter, which ends in late December and includes the holiday-shopping season. The company expects revenue to be between $76 billion and $78 billion, compared with the record $75.9 billion in the year-earlier period. However, the fiscal-year Q1 2017 includes an extra week, analysts noted, making it unclear how strong the company expects iPhone 7 sales to be through the end of the year. Moreover, Apple forecast gross margin of between 38% and 38.5%, below Wall Street expectations.

On a call with analysts, Cook said “demand continues to outstrip supply” for the iPhone 7, and particularly the larger-screen iPhone 7 Plus, but the company did not break out sales figures for the new models.

For the December quarter, analysts have expected iPhone sales to get a lift from the woes of rival Samsung Electronics. Last month Samsung issued a massive recall for the Galaxy Note 7 smartphone after overheating batteries caused some devices to catch fire and subsequently terminated the product altogether.

Sales in Apple’s “other products” segment — which includes Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories — dropped 22%, to $2.37 billion.

Meanwhile, iPad unit sales of 9.27 million were down 6% for the September quarter, while revenue was flat. Mac sales dropped 17% compared with the year-earlier period, to $5.74 billion. Apple has announced an Oct. 27 event, where it’s expected to roll out a new Macbook Pro and possibly a new iMac.

Apple said international sales accounted for 62% of the quarter’s revenue, which is its fiscal fourth-quarter 2016. Sales in Greater China dropped by 30%, to $8.79 billion. Cook said the largest reason for the year-over-year decline in China was because in the September 2015 quarter, Apple saw an unusual surge of customers upgrading to the iPhone 6 and iPhone 6 Plus. “We are very bullish on China,” he said.

Popular on Variety

More Digital

  • Elite Season 2

    San Sebastian: Spain’s SVOD Players Debate Competition, Brand, Talent

    SAN SEBASTIAN  — Executives from HBO, Netflix, Amazon and Movistar+ and “Elite” co-creator Darío Madrona took to the stage to field questions on the Global Impact of Spanish Series. Here, briefly, are five takeaways: 1.Spain First “La Casa de Papel” was watched by 34,355,956 Netflix accounts over its first seven days,  after a July 19 [...]

  • Tinder - Swipe Night

    Tinder's Apocalyptic 'Swipe Night' Interactive Dating Show Sets Release Date

    Tinder next month will bow its first original entertainment content — “Swipe Night,” an interactive adventure series in which viewers are forced to make dating choices on humanity’s last night on Earth. Variety previously reported details of the location-based social network/dating app service’s foray into original content, which recently wrapped production in Mexico City and [...]

  • Editorial Use onlyMandatory Credit: Photo by

    YouTube Rolls Back Verification Changes, Says Verified Creators Can Keep Their Badge

    A day after announcing significant changes to its verification program, YouTube announced Friday afternoon that it won’t be de-verifying existing creators after all. “We heard loud and clear how much the badge means to you,” said YouTube product manager Jonathan McPhie in a blog post. “Channels that already have the verification badge will now keep it [...]

  • BLive: BitTorrent Live Streaming App to

    BitTorrent to Launch Public Beta of New Live Streaming App

    BitTorrent is getting ready to open the floodgates for its new live streaming app, dubbed BitTorrent Live: The company plans to launch a BitTorrent Live Android app on various app stores as part of a public beta test late Friday, according to a spokesperson. BitTorrent Live, which is also known as BLive, is being described [...]

  • Netflix - Apple TV

    Netflix Stock Drops After CEO Acknowledges 'Tough Competition' Coming From Disney, Apple

    Netflix shares fell as much as 7% Friday to a nine-month low, coming after CEO Reed Hastings commented that the November launches of Disney Plus and Apple TV Plus will introduce a “whole new world” of competition. Hastings, speaking at the Royal Television Society conference Friday in Cambridge, England, said, “While we’ve been competing with [...]

  • Facebook

    Facebook Suspends Tens of Thousands of Apps During Privacy Investigation

    Facebook has suspended tens of thousands of apps ever since it began investigating potential privacy abuses, the company said Friday. The apps in question had been built by around 400 developers, and a suspension doesn’t necessarily indicate actual privacy violations. Facebook began combing through millions of apps that made use of its platform after the [...]

  • tivo logo

    Tivo Plans to Launch Android TV Dongle, Tivo+ Curation App

    DVR maker Tivo is getting ready to release a new device that may not record television at all: The company plans to launch a $50 Roku-like TV dongle early next year, its new CEO Dave Shull revealed in a conversation with CNN this week. The new device will be powered by Google’s Android TV platform, [...]

More From Our Brands

Access exclusive content