A customer compares a new jet black iPhone 7, right, with her iPhone 6 at an Apple Store in Chicago.... [+]
Everyone was watching on Tuesday afternoon for Apple's latest iPhone sales numbers.
Since releasing the iPhone 7 in September, Apple stock has gone up nearly 10%, posting its best performance in 2016 so far. But the fourth quarter earnings report showed whether that optimism was warranted--as it was the first time Apple told Wall Street how well the iPhone 7 is selling. The results: mixed.
Apple beat analyst estimates of earnings per share ($1.67 vs. $1.66) and iPhone units sold (45.5 million vs. 45 million) but not revenue ($46.9 billion vs. $47 billion). But across the board all numbers were down from the fourth quarter a year ago. A bright spot: Apple's revenue guidance for next quarter was higher than expected, at $76 to $78 billion. Apple shares traded down 2% after hours.
"Our strong September quarter results cap a very successful fiscal 2016 for Apple," CEO Tim Cook said in a statement. "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, where revenue grew 24 percent to set another all-time record."
Compared with a year ago, Apple revenues are up in Europe and Japan, while down in China and the Americas. China especially should be a worry for Apple. Sales there declined by 30% year over year. iPhone, iPad, and Mac unit sales all fell from last year, with "services" like the App Store, Apple Music, and Apple Pay the only product segment going up.
Apple hoped the new phones will restart its growth engine after the lackluster performance of the iPhone 6S and 6S Plus line. The company faces difficult headwinds in China, where it has lost market share, and in the U.S., where smartphone saturation has occurred. Still, there are bright spots: according to data from Fisku, the latest version of iOS is being adopted at the fastest rate ever.
Meanwhile, Apple’s main rival Samsung remains in serious trouble over its defective Galaxy Note 7. Retailers and wireless carriers no longer sell those Samsung models, giving other Android handset makers and Apple a chance to pick up market share.
On Thursday, Apple is expected to announce new versions of its flagship MacBook laptops at an event on its campus in Cupertino, CA.
