iPhone sales are down again, after a brief stint by the end of last year that propelled Apple back to the top spot of the worldwide smartphone market. The iPhone 7 and iPhone 7 Plus were a hit, but the momentum both devices gained during the holiday season did not keep up in the new year. Apple sold 50,7 million iPhones in the first three months of 2017, less than the 52 million analysts expected and less than the 51,6 million IDC said the company shipped. Compared to the same quarter of last year, unit sales were down 1% and revenue was up 1%.
All in all, a flat quarter for the iPhone, which is Apple's unrivaled cash cow.
The bad news
Not only did Apple sell fewer iPhones than expected, the company also reported lower sales of its tablet line. A total of 8,9 million iPads were sold this quarter, meaning unit sales were down 13% and revenue fell by 12%. Despite the downward spiral, Apple CEO tim cook said the newest iPad Pro was very well received by consumers and the tablet remains "the most popular" in the world.
Fiscal Q2 brought in $52.9 billion in revenue, up 5%, and $11 billion in net income, only slightly better than the year-ago quarter ($10.5 billion). This was not exactly thrilling from the investors' point of view, which is why the company's stock took a beating in after-hours trading.
Earlier in the day, it had soared to an all-time high, approaching $148.
The good news
Tim Cook seemed unfazed by the numbers, as per usual, when he addressed analysts after the earnings release. He said he was "proud" of the performance, during a quarter that is usually not very strong. And he's got some reasons to be happy: the Macintosh business grew 14% in revenue, bringing in $5.84 billion.
Chief Financial Officer Luca Maestri mentioned how the Mac line showed strength in face of a depressed computer market.
Another highlight, perhaps the most surprising number of the quarter, came from the Services unit. This is where the company accommodates iTunes, iCloud, Apple Music and the App Store, among others services; it grew 18% year-on-year, topping $7 billion for the second quarter in a row.
Tim Cook told analysts that both Apple Music and storage service iCloud grew by "double digits" and Apple now has more than 165 million active subscriptions. He also mentioned a show of force by the Apple Watch, which "nearly doubled" its sales and remains the world's most popular smartwatch. The category "Others," where Apple includes the Apple Watch, TV, and Beats businesses, grew 31%, generating $2.9 billion.
This is how Apple was able to deliver an increase in revenue and remain a serial cash generator. Luca Maestri said Apple now sits on a sizeable, not-too-shabby $258 billion pile of cash.
