Apple profit hit as iPhone sales drag

Global technology titan and retailer Apple has reported quarter-three profit of $10 billion, which was down 13% year on year as iPhone sales stuttered.

Overall quarterly revenue for the three months to 29 June edged up by 1% year-on-year to $53.8 billion, but iPhone sales dropped by 12% from $29.5 billion last year to $25.9 billion.

Sales in its Mac, iPad, and wearables, home & accessories divisions all increased, as did revenues within its services arm. International sales – those outside the US – accounted for 59% of the quarterly revenue.

Despite the negative net income and iPhone figures, Apple CEO Tim Cook talked up the trading period as “our biggest June quarter ever, driven by all-time record revenue from services, accelerating growth from wearables, strong performance from iPad and Mac and significant improvement in iPhone trends”.

“These results are promising across all our geographic segments, and we’re confident about what’s ahead,” he noted.

“The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.”

Yoram Wurmser, principal analyst at market research group eMarketer, said: “This is the first time since 2013 where iPhones did not account for the majority of Apple’s revenue in a quarter.”

To clarify, Wurmser means iPhone sales represented less than half the overall revenue for the quarter – something that has not occurred for six years.

He added: “With iPhone sales dipping, Apple is trying to get more money from existing iPhone owners by promoting new services. That’s working, but the most promising number may be the wearables figure, likely representing strong growth in sales of Apple Watch and AirPods."

Figures from eMarketer show that, in the UK, Apple is expected to account for nearly 42% of smartphone users in 2019, a slight increase from 40.5% last year. Android is estimated to account for 55.7% of UK smartphone users, up 0.4% on 2018.

Apple iPad users in the UK will total 19 million in 2019, accounting for just over 50% of tablet users in the country, according to eMarketer’s projections.