Apple Profit, Revenues Down; Reports Drop In IPhone Sales

(RTTNews) - Tech giant Apple Inc. (AAPL), Tuesday reported a drop in second-quarter profit, hurt largely by double-digit revenue decline reflecting weak iPhone sales. Poor results and a weak outlook sent the company's shares plunging down more than 7 percent in after-hours trading, erasing about $40 billion in market cap.

Apple reported its first year-over-year decline in iPhone sales since its launch in 2007, reflecting a saturated smartphone market. Sluggish economic growth in China-- Apple's second-biggest market after the U.S, less frequent upgradation of iPhones by customers and mediocre reception of new iPhone SE also contributed to iPhone sales decline.

The smartphone pioneer said it sold 51.19 million iPhone units during the quarter, generating $32.86 billion in revenues. This compares to sales of 61.17 million units and revenues of $40.28 billion last year.

Cupertino, California-based Apple has entered the wearables market, improved its Mac lineups and launched a new music-streaming service. Still, its bottom line continues to be buoyed by iPhone sales, as it contributes about two-thirds of Apple's revenues and a major part of its profit.

Apple's second-quarter profit dropped to $10.52 billion or $1.90 per share from $13.57 billion or $2.33 per share last year. Analysts had expected the company to earn $2.00 per share, according to figures compiled by Thomson Reuters.

Apple said its revenue dropped to $50.56 billion from last year's $58.01 billion, its first year-over-year quarterly sales drop since 2003. Analysts had predicted revenues of $51.97 billion.

Our team executed extremely well in the face of strong macroeconomic headwinds," said Tim Cook, Apple's CEO. "We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices."

Looking forward to the third quarter, Apple expects revenue between $41 billion and $43 billion. Analysts currently project revenues of $47.32 billion.

Further, Apple authorized an increase of $50 billion to its program to return capital to shareholders. Apple now plans to spend a cumulative total of $250 billion of cash by the end of March 2018. The Board also boosted its quarterly dividend by 10 percent to $0.57 per share, payable on May 12 to shareholders as of May 9.

AAPL closed Tuesday's trading at $104.35, down $0.73 or 0.69%, on the Nasdaq. The stock further dropped $7.96 or 7.63% in the after-hours trade.