Apple Forecasts Another Revenue Decline Next Quarter

Apple today reported its first year-over-year decline in quarterly revenue since 2003, and its guidance for the third quarter of the 2016 fiscal year suggests that the downward trend is likely to continue.

Apple expects third quarter revenue of between $41 billion and $43 billion, which would be up to 18 percent lower than the $49.6 billion in revenue it posted in the year-ago quarter.

The company also expects a gross margin between 37.5 percent and 38 percent, operating expenses between $6 billion and $6.1 billion, other income/expenses of $300 million, and a tax rate of 25.5 percent.

Apple's first revenue decline in thirteen years is largely attributable to the first ever year-over-year decline in iPhone sales, which dropped to 51.2 million from nearly 61.2 million in the year-ago quarter.

iPad and Mac sales also declined to 10.25 million and 4.03 million respectively in the March quarter, compared to 12.62 million and 4.56 million respectively a year ago.

Meanwhile, Apple experienced growth in both its Services and Other Products categories, the latter of which totaled $2.19 billion and includes sales of iPods, Apple TVs, Beats Electronics, and Apple-branded and third-party accessories.

Quarterly revenue from the iTunes Store, App Store, Mac App Store, iBooks Store, AppleCare, Apple Pay, licensing, and other services amounted to nearly $6 billion, up from $5 billion in the year-ago quarter.

The Americas remain Apple's largest market with $19.1 billion in revenue, followed by China where revenue fell rather sharply to $12.5 billion compared to $16.8 billion in the previous March quarter.

Tags: earnings, Apple, AAPL

Top Rated Comments

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Fender2112

46 months ago

To be fair, people are tired of paying a premium for old technology.

Rating: 11 Votes

69650

46 months ago

Apple have been taking their customers for granted for too long and it's coming back to bite them in the ass now.

Rating: 10 Votes

LordBeelzebub

46 months ago

This happens to most companies. A company creates a hit product, they ride the the wave of success and popularity for awhile, then their product becomes common and ordinary and the success and popularity fades away.

Now the question is, will Apple fade away or create another amazing product? Needless to say Apple has been riding the successful wave of the iPhone for long enough, touch screen smart phones are common place now, Apple isn't the only company making them, so they can no longer rely on the iPhone to fuel their successes.

Sorry Apple, you need to do something or put a for sale sign on that new campus already.

Rating: 5 Votes

555gallardo

46 months ago

The day had to come... On the other hand, this one should been expected.

Rating: 5 Votes

pcmacgamer

46 months ago

Gonna have to really innovate to get people to upgrade products yearly. Not surprised much by the drops. The markets for all their product lines are pretty saturated.

Rating: 5 Votes

RockSpider

46 months ago

Welcome to the real world Apple, can't say Im sorry.Maybe people are sick of smelling glue and 1.2ghz CPUs and giant bezels.

Rating: 5 Votes

nostaws

46 months ago

They need to innovate new products and services, not just upgrading current ones.

Gonna have to really innovate to get people to upgrade products yearly. Not surprised much by the drops. The markets for all their product lines are pretty saturated.

Rating: 4 Votes

itsjustmeee

46 months ago

I'm far from an Apple basher, and for many many years I'd have put myself way more into the fanboy category. But this news doesn't surprise me at all. Apple has really lost it's sparkle lately. And from what I can see, the old Steve Jobs magic is gone. I knew there was trouble as soon as I saw the Apple Watch and didn't want it. It's the first Apple product that I thought was ugly and didn't have the refinement that they've been known for. It's half baked in my humble opinion. At times I honestly wish that I wasn't so deeply entrenched in the Apple ecosystem. The Android phones and watches are actually looking better and better to me. Damn.

Rating: 3 Votes

kas23

46 months ago

And with Apple geared to release an iPhone 6SS next Fall, numbers are going to continue to be grim for awhile. They like to blame it on a "poor economy", but they (i.e. Jobs) weathered the last recession fairly well. I like him, but unless they have an ace up their sleeve (which I doubt they do), Tim Cook is not likely to survive this downturn.

Rating: 3 Votes

nikespex

46 months ago

I think Apple Watch is the most polished 1.0 device they've ever made.

It took iPhone 3-4 years before it really took off. The original iPhone was slow, lacked some basic features and had no 3rd party apps but look where it is today.

Karma, as someone who purchased the original iPhone it may have been a bit slow at launch, but it still felt like an amazing device that was leaps ahead of anything else at the time. Improvements to the OS were swift, with the App store debuting one year later and all of a sudden my phone did all kinds of new things. That year also saw the 3G support in the new model to fix some of that network slowness in the original phone.

Contrast that with my Apple Watch. A year later there have been revisions to the OS, but I find it hard to see any meaningful improvements. There are glaring holes in the apps that ship with the watch that still are not fixed a year later. It's as though Apple released this immature product and then left it to gather dust.

I've been an Apple fanboy for more than a decade, but I have to agree with others who say the sparkle is gone. Too many products and variants of each product. I would love for Apple to go back to making a few really great things and bringing real innovation and quality to those few things.

Rating: 3 Votes

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