iPhone sales beat expectations as Apple reports $46.9bn Q4

25 Oct 2016

Apple CEO Tim Cook taking a selfie on an iPhone with Trinity College Dublin students last year. Image: Laura Hutton/Shutterstock

Apple surpassed analysts’ expectations by selling more iPhones, but a 24pc surge in revenues from Services indicates a new future for the California tech giant.

Apple reported fourth quarter revenues of $46.9bn, down 9pc, marking it as the company’s third quarter of quarterly sales decline.

The Q4 performance compares with $51.5bn reported in the fourth quarter of 2015.

Despite the decline, the company is still the largest tech performer by revenue and particularly by profit, with some $9bn gains generated in Q4.

Either way, the tech giant is confounding Wall Street expectations, selling 45.5m iPhone devices during the fourth quarter – more than the 44.8m expected by analysts.

The reality is that even despite the declining numbers, Apple is still a tough act to follow, with a war chest of $237.6bn in cash and investments.

“Our strong September quarter results cap a very successful fiscal 2016 for Apple,” said Tim Cook, Apple’s 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, where revenue grew 24pc to set another all-time record.”

Services the next iPhone for Apple?

While Apple is still coy to report how many Apple Watch devices have been sold, for Cook to place an emphasis on Services – which includes apps and music – is quite telling and indicative of a future that is increasingly software-based.

The company sold 4.9m Mac devices in Q4, down 14pc, which indicates it’s the right time for the tech giant to bring out a new line-up on Thursday (27 October). Interestingly, Apple itself leaked details of a new MacBook Pro that sports a second OLED screen for functions to suit specific apps as well as the disappearance of an Esc key.

The overall performance means that for the first time since 2001, Apple revenues have actually declined.

While Services may be on the rise, the critical iPhone device accounts for two-thirds of the company’s revenues and it may be some time before Services revenue really contributes to the tech giant’s bottom line.

Critically, Apple was buoyant in its predictions for the crucial Q1 sales season which takes in Christmas, projecting a better-than-expected $76bn to $78bn.

Tim Cook in Dublin. Image: Laura Hutton/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years