Apple sees first year-over-year revenue decline in 13 years on falling iPhone, Mac sales

By Julian Chokkattu April 26, 2016

Apple has posted its second quarter earnings for 2016, and it shows the first year-over-year revenue decline in 13 years.

Apple’s revenue for the second quarter, which ended in March, was $50.6 billion, a 13 percent decline from last year. The quarter’s net income also went down from last year’s $13.6 billion to 10.5 billion, which comes out to be $1.90 a share. The company’s gross margin dipped from 2015’s 40.8 percent, to 39.4 percent.

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“Our team executed extremely well in the face of strong macroeconomic headwinds,” Apple CEO Tim Cook said in the announcement. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

The blame can be pointed to falling sales of the Cupertino company’s premier product, the iPhone. Apple shipped 51.2 million iPhones in the second quarter of this year, which is down 16 percent from the 61.2 million it shipped last year.

Mac and iPad sales are also down, resembling a downward trend in the market. Macs went from 4.6 million last year to 4 million, and iPads sunk from 12.6 million units to 10.3 million.

But it’s not all bad news. Apple CEO Tim Cook said in the earnings call that the company has added more switchers (customers who used to own a device from another company) in first half of this year than any other six month period. And Apple is doing really well with its services, as revenue reached its highest ever: $6 billion, up 20 percent from last year.

That accounts for App Store revenue, which is up 35 percent, and Apple Music has reached 13 million paying customers, up from the 11 million it had in February of this year. Sales of the Apple Watch surpassed those of the iPhone in its first year as well, meeting expectations. Apple Pay’s expansion into China and Singapore also helped — the company says its customers have access to more than 10 million contact-less payment locations, with 2.5 million just in the U.S.

If you’re wondering how the iPhone SE impacts these numbers — it doesn’t. The company hasn’t recorded the results yet, as the 4-inch phone launched after the end of the second quarter. Cook says demand has surpassed supply, and the company is working hard to ship devices.

The company has projected its June quarter revenue to fall between $41 to $43 billion, which is down again from 2015.

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