Apple Profits Slide, As Cook Points To Wearable Growth

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Profits and year revenues at Apple slide amid slow iPhone sales, but sales from wearables and services rose

Apple has produced mixed financial results for its fourth quarter and FY19 annual results, which revealed the ongoing slowdown for its main cash cow, the iPhone.

Annual profits and sales fell at the iPad maker, but CEO Tim Cook pleased the markets when he pointed to better than expected uptake of its latest iPhone devices, namely the iPhone 11, iPhone 11 Pro, iPhone 11 Pro Max that were released in September.

And Cook also highlighted the increased revenue from accessories such as the Apple Watch and AirPods as well as new services such as its Apple Card credit card and a streaming television service set to begin on this week. The recently announced AirPods Pro are also expected to be a big seller at Christmas.

Mixed quarter

It is clear from Apple’s results that it has been a mixed year considering the ongoing trade war between the United States and China.

For the fourth quarter ending 28 September, Apple posted 3 percent fall in net profit down to $13.7bn, down from $14.125bn in the same year-ago quarter.

Quarterly revenues however rose a modest 1.8 percent to $64bn from $62.9bn a year earlier.

Analysts had only been expecting $62.99bn, Wall Street at least was pleased and shares rose 2 percent to $247.50 in after-hours trading.

“We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fueled by accelerating growth from Services, Wearables and iPad,” said Cook. “With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-cancelling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best lineup of products and services ever, we’re very optimistic about what the holiday quarter has in store.”

Breaking down the quarterly revenue figures, it is clear that the iPhone remains Apple’s principle money maker.

During the fourth quarter the Cupertino, California-based company said it generated $33.4bn in iPhone sales. Analysts had been expecting $32.4bn in iPhone sales.

But there is no getting away from the fact that this represents a 9.2 percent drop in iPhone sales during the quarter, but Tim Cook noted that this was an improvement from recent quarters in which iPhone sales had slowed by double digits.

This means that this is now the fourth straight quarter of year-over-year declining iPhone sales.

Annual decline

But the good news is that Apple is growing its revenue from accessories such as the Apple Watch and AirPods as well as new services such as its Apple Card credit card and its streaming TV service.

Apple’s services and accessories segments generated $12.5bn and $6.5bn in fourth-quarter revenue, respectively.

Cook also revealed that customers will be able to buy iPhones using the Apple Card with no interest for 24 month.

Yet despite the positives, a more sobering assessment can be seen when Apple’s annual financials are examined closely.

For the full year, Apple posted a net profit of $55.3bn, which is quite a bit down from $59.5bn it posted in 2018.

Yearly revenues also fell to $260.2bn from $265.6bn in 2018.

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Author: Tom Jowitt
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