Strong demand for the iPhone 7 has seen Apple Inc. rise from a streak of disappointing revenue performances.
Iphone 7 Pushes Apple To Highest Ever Quarterly Revenue
Investors are now hopeful that Apple Inc. is confidently emerging from a rough patch that had seen a consecutive decline in revenue, all thanks to promising iPhone 7 sales.
Unveiled in September last year, sales of the newest Apple phone have skyrocketed amidst a 5% increase in shipments in the last quarter. iPhones account for up to two thirds of the tech giant’s sales and helped to increase total revenue by 3% to $78.4 billion, the highest recorded quarterly revenue.
The revenue boom may also be attributed to Apple’s app store, payments services and its music business all of which saw a 18% increase in revenue from the same time in the previous year, bringing the total revenue from the services business to $7.2 billion.
According to Tim Cook, Chief Executive of Apple, he anticipates the services business to double its revenue over the next four years.
He said in an interview, “There is plenty to feel great about.”
After normal trading hours, Apple shares rose more than 3% on Tuesday placing the value of each share at $125. Presently, the value of the company’s shares is just about 6% lower than its historical closing record of $133 recorded in February 2015. In May last year, Apple share prices fell to around $90.
Even then, these latest financial results showed that the tech giant is still struggling to keep up with the pace that initially made it the most valuable company in the world.
Although the iPhone 7 played a significant role in boosting the results, it did not register the double-digit increase in sales in the same way that past iPhone models did in their first quarter. In the last quarter of 2014, for example, when the iPhone 6 was launched, shipment of the smartphones grew by 46%.
Chinese soft spot
Sales of Apple phones in China seem to be stabilizing. However, Apple continues to face stiff competition in this market as consumers increasingly opt for less expensive high-end phones from the likes of Huawei and Oppo.
Greater China, the largest market for smartphones, has witnessed a decline in iPhone purchases, with sales falling 12% down to $16.2 billion in the last quarter, according to reports by Apple.
Currency fluctuations have been blamed for the slowdown in iPhone sales but executives are optimistic about sales in the services business.
Mr. Cook said during a conference call, “I am encouraged with the great improvements but there are challenges there [China].”
Mr. Cook was the head of the supply chain at Apple previously before becoming the company’s top executive. He has indicated that recently, Apple has made some operational mistakes that have had an impact on the company’s sales.
Some of the mistakes made include insufficient supply of products such as the Apple Watch and the iPhone 7 Plus. Although demand for the iPhone 7 Plus was the largest the company has ever witnessed, the supply was inadequate and contributed to the low sales recorded this past quarter.