Apple’s First Quarter Results – Editorial

APPLE just announced its first quarter results.

CUPERTINO, California — January 26, 2016 — Apple® today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.

Apple achieved some huge numbers but despite the massive amounts of profit, it also represented the slowest amount of growth for the iPhone since it launched in 2007. Also adding to the concern that sales of the iPhone have plateaued is that Apple said revenue for the next quarter would be between $50bn and $53bn, lower than the $58bn it reported for the same period last year. The initial growth spurt in China of 70% last year was only 14% this year. None of this is surprising. At some point what goes up must come down. Is it all doom and gloom? Actually these results represent the largest quarter profit in history ever made by any company.

What is clear from these iPhone numbers is that Apple is going to face a decline in iPhone sales, which is also impacting many other smartphone manufacturers.

So where is Apple going to make up the shortfall. Well Apple TV, iPads, Beats headphones and the Apple Watch are all lumped into the Other category. Revenue in this section rose from $1.6 billion to $4.3 billion. Was this growth down to the Apple Watch? Or the new Apple TV? Nobody knows and Apple is keeping quiet about this figure. It is likely that Apple Watches were bought as Christmas presents and if so there may be a decline in this category for the next quarter.

Either way, Apple makes no bones that the trading environment for 2016 will be challenging. Even if sales decline slightly, Apple will more than likely still make more profit than any other smartphone manufacturer!

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