iPhone shipment slides 5%
Apple (AAPL) sold more iPhones than expected in the quarter ending in September, the company’s fiscal 4Q16. However, Apple still struggled with weakening demand for its most important product during the quarter. The iPhone accounts for the bulk of Apple’s revenue. In the latest quarter, the company shipped 45.5 million iPhones, exceeding its internal guidance of 44.8 million units. However, shipments were down nearly 5% from the corresponding quarter last year.
Samsung’s woes are Apple’s opportunity
The chart above shows iPhone shipments in the last five quarters to fiscal 4Q16. Apple investors are pegging their hopes on the iPhone 7 to stem sliding iPhone sales and revenues. The device boasts a faster processor, larger battery, and an improved camera compared to its predecessor. Apple also removed the audio jack in the iPhone 7, thus increasing its dust and water resistance properties. It remains to be seen if the improvements will drive upgrades.
However, the timing of the iPhone 7 release could be Apple’s greatest opportunity. The massive recall of Samsung’s (SSNLF) Galaxy Note 7 takes out some competition for iPhone 7 this holiday season. Alphabet (GOOGL) also recently launched a new Pixel smartphone.
Attempts to break reliance on iPhone revenue
Faced with slowing demand for its smartphones in the consumer market, Apple inked a deal with International Business Machines (IBM) to help it sell iPhones to enterprise customers. The company is pursuing new revenue opportunities outside iPhone and those efforts include entry into the streaming music business where it competes with Pandora Media (P) and more recently, Amazon (AMZN).
Fiscal 4Q16 results
Apple posted EPS (earnings per share) of $1.67 on revenues of $46.9 billion in the last quarter. Though the results slid from the corresponding quarter last year, they were in line with the consensus estimates that called for EPS of $1.66 on revenue of $46.94 billion.
The latest quarter marked the third consecutive quarter of falling revenue for Apple.