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October 26, 2016

Apple profits fall as iPhone sales plummet in China

Apple pivots to services business as iPhone sales decline.

By Alexander Sword

Apple’s revenues and profits have dropped again in Q4 as iPhone sales continue to decline.

The company achieved quarterly revenue of $46.9 billion and quarterly profit of $9 billion. These figures represent declines of 9 percent and 19 percent respectively year-on-year.

For the full-year, profits fell 14 percent to $45.7bn.

The fall was driven by plummeting iPhone sales, which fell 5 percent year-on-year to reach 45,513 units shipped. This continues the decline in sales that began in Q2 2016. For the full year, sales fell 8 percent compared to 2015.


The iPhone 7 was launched in 2016.

In particular, Apple can no longer rely on the China market for growth, which is becoming saturated. In Q4 2016 there was a year-on-year drop of 30 percent in this market.

The Americas also saw revenue down 7 percent, while in Europe and Japan there were increases of 3 and 10 percent respectively.

iPad and Mac sales fell as well in Q4, down 6 percent and 14 percent respectively.

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However, Apple saw some growth in its services business, where revenue grew 24 percent to reach $6.325 billion. This could be a potential future area of growth for the company as device sales fall.

“Our strong September quarter results cap a very successful fiscal 2016 for Apple,” said Tim Cook, Apple’s CEO.


Tim Cook, Apple CEO.

“We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business,” said Cook, citing the figure there as an all-time record.

“We are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter,” said Luca Maestri, Apple’s CFO. “We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program.”

For Q1 2017, Apple expects revenues of between $76 billion and $78 billion.

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