Shares of Apple are down nearly 2 percent in pre-market trading after their quarterly revenues came in slightly lower than expected for its fiscal 2017 second quarter earnings that also saw weaker sales of iPhones compared to the same quarter a year ago.
For the quarter, Apple gained quarterly revenue of $52.9 billion, slightly below the $53 billion consensus estimate.
Despite a minor revenue miss, Apple outperformed with a $2.10 earnings per share, beating the $ 2.02 earnings per share consensus estimate.
“We are proud to report a strong March quarter, with revenue growth accelerating from the December quarter and continued robust demand for iPhone 7 Plus,” said Apple CEO Tim Cook.
Apple sold 50.763 million iPhones for the quarter, missing the 51.4 million estimate from Bloomberg, and weaker than 51.193 million in the same quarter a year ago.
Global revenue was up 5 percent year on year.
“That’s despite a $1 billion year-over-year revenue headwind from foreign exchange in the March quarter and a larger iPhone channel inventory reduction this year versus last year” said CEO Tim Cook during the conference call.
Mac revenue grew 14 percent to a new March quarter record and gained market share with strong demand for Apple’s new MacBook Pros.
Mac revenue growth was up 20 percent in China.
Apple sold 4.2 million Macs, up 4 percent over last year.
Macs have generated over $25 billion in revenue during the past four quarters.
Apple Watch sales nearly doubled year over year.
Apple’s Services which includes Apple Music, iTunes, iCloud storage, and Apple’s App store had the best quarter ever and generated $7 billion in revenue, an increase of 18 percent year over year.
“As we said last quarter, our goal is to double the size of our Services business by 2020” CEO Tim Cook said.
Gross margin was 38.9 percent, at the high end of Apple’s guidance range.
In China, first half revenue was down 13 percent year over year, about a third of which resulted from forex exchange but it marked an improvement over a 32 percent revenue decline in the second half of last year.
Apple is currently facing fresh competition from the well reviewed Samsung Galaxy S8, following the recall of its Samsung Galaxy S7, and is also competing against a growing host of local competitors in China.
There are big hopes riding on the shoulders of Apple’s upcoming iPhone release, which won’t be released for several more months, and is expected to be called iPhone 8 that will mark the 10 year anniversary of the iPhone with some possible breakthrough innovations emerging.
For its fiscal 2017 third quarter, Apple is forecasting revenue between $43.5 billion and $45.5 billion and gross margin between 37.5 percent and 38.5 percent.
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