iPhone sales slump, but Apple’s in it ‘for the long term’

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quotes on Apple
Measure the money, not number of units sold.
Illustration: Cult of Mac

Apple unveiled its earnings for Q1 2019 this afternoon and as expected, total revenue came in a lot lower than Apple originally predicted at the end of last year, with iPhone sales dropping 15%.

Thanks mostly to slumping sales in Greater China, Apple posted $84.3 billion in revenue, marking a drop from the $88.3 billion the company pulled in during the same quarter a year ago. Even though iPhone sales are struggling, Apple’s services are bringing in more money than expected, giving investors some good news.

“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Apple CEO Tim Cook. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”

Revenues from China were down 27%. For the first time ever, Apple broke out gross margin data, revealing that it’s making 34% profit on hardware and nearly 63% profit on services.

Even though Apple isn’t giving sales numbers for the iPhone, iPad and Mac anymore, it did provide total revenue. The iPhone brought in $51.98 billion while the iPad made $6.73 billion, which was slightly higher than expected. Mac sales brought in $7.41 billion while wearables and accessories made $7.31 billion for the company.

Services revenue came in at $10.9 billion.  Meanwhile, Apple hit a new record for earnings per share at $4.18. Net cash balance was $130 billion at the end of the quarter.

One of the biggest things investors were watching for is Apple’s guidance for next quarter. The company expects revenues to drop about 3% during Q2 2019 with gross margins between 37% and 38%.

Here’s Apple’s total guidance:

  • revenue between $55 billion and $59 billion
  • gross margin between 37 percent and 38 percent
  • operating expenses between $8.5 billion and $8.6 billion
  • other income/(expense) of $300 million
  • tax rate of approximately 17 percent