Apple just posted its Q1 2016 financial report, where it posted record revenues and profits once again. But the more interesting thing might be what it’s predicting for next quarter, where the company expects to report between $50 and $53 billion in revenue. That would put it below the $58 billion it reported in Q2 2015 and would mark the first year-over-year decline in revenue for the company in years.
The slight decrease can likely be attributed to falling iPhone sales, which have been predicted for some time now. In Q1, Apple reported sales of 74.7 million iPhones, which is just barely better than the 74.5 million it did in the same quarter last year. Apple did not say how many it expects to sell in Q2, but analysts have predicted declines as high as 25 percent. During the investor call following today’s report, CEO Tim Cook admitted that “iPhone sales will decline in the [second] quarter,” but he noted that the company doesn’t expect them to fall as much as outside estimates have said.
iPad sales continue to plummet, by 21% to 16.1 million. So far, it seems like the iPad Pro hasn’t made much of a dent. Apple isn’t releasing sales numbers for the Apple Watch, so it’s hard to say anything meaningful about that one.
That being said, Apple’s numbers are still every bit as staggering as they’ve been for a while now, and we all knew the increase in iPhone sales would stall eventually. With as much cash stashed in tax havens as Apple has, there’s really very little to worry about regarding Apple’s continued existence, but stock traders see this differently – they’re not interested in past results, they’re only interested in growth. And right now, the iPhone is pretty much the one big pillar responsible for virtually all of Apple’s growth, and if that one starts to stall, Wall Street folk will get nervous.
I don’t think it has anything to do with Apple, and everything to do with the global economy slowing down. The article even hints at that:
“The other factor that is pummeling Apple’s sales is the overall decline in China’s economy, which has affected the greater luxury goods market already. Apple says if currency exchange rates had remained the same as they were 18 months ago, it would have reported $80.8 billion in revenues for Q1, as opposed to the $75.9 billion it actually cleared.”
We are already in correction territory and probably going to end up in a bear market. The fact that Apple still had a YOY net increase in sales despite a down-turning global economy speaks volumes, especially when many manufacturers were already struggling to stay afloat when the global economy was strong.
Personal opinion, but I think this upcoming recession will weed out a lot of smartphone manufacturers (yeah, I really went out on a limb with that one). The money’s just not there anymore.