Advertisement

SKIP ADVERTISEMENT

Customers Waiting on New iPhones Crimp Apple’s Profits

An Apple store in Short Hills, N.J. The number of iPhones sold globally fell 1 percent in the first calendar quarter, Apple said.Credit...John Taggart for The New York Times

SAN FRANCISCO — Apple’s iPhone business is sailing squarely into the doldrums between new models.

The company said Tuesday that the number of iPhones sold globally fell 1 percent in the first calendar quarter, compared with the same period a year ago, although revenue rose to $52.9 billion as more customers bought the supersized, more expensive iPhone 7 Plus.

Apple’s net income per share rose more than 10 percent, as a result of cost-cutting, higher prices and the company’s continuing program to buy back its stock.

The first two calendar quarters are often sluggish for Apple as customers await new versions of products. But unusual expectations for the 10th anniversary iPhones, due in September, may have worsened the slowdown.

“People are waiting to see what’s going on with the new iPhone,” said Ben Schachter, an analyst at Macquarie Securities. “Apple needs to make sure the next phone has that ‘wow’ factor.”

That will be particularly important in China, the world’s largest smartphone market, where revenue fell 14 percent in the three months that ended April 1. The continuing poor results there dragged down brisk sales elsewhere, Apple executives said.

“We gained market share in almost every country that we track,” Luca Maestri, Apple’s chief financial officer, said in an interview.

Timothy D. Cook, Apple’s chief executive, focused on several bright spots during a call with investors. Services grew 18 percent to $7 billion, and Mr. Cook said that customers were paying for 165 million active subscription services from Apple and third parties.

“Apple Watch sales nearly doubled year over year,” Mr. Cook said. “Our active installed base of iPhones grew by double digits.”

Apple is awaiting the outcome of tax policy discussions in Washington. President Trump has proposed a major cut in the corporate tax rate and has suggested he would favor a reduction in taxes for money that American corporations hold abroad.

The company had $257 billion in cash and marketable securities on its balance sheet as of April 1, and analysts estimated that about 90 percent of it was stashed overseas.

A tax cut would be “very, very beneficial,” Mr. Maestri said, but Mr. Trump’s plan remains vague and has not yet been introduced as legislation. “It’s very difficult for us to speculate at this point in time what might happen,” he said.

Apple’s stock, which closed at a high of $147.51 on Tuesday, fell more than 2 percent in after-hours trading once its results had been released.

Apple raised the amount of money it was willing to commit to stock buybacks by $50 billion, and Mr. Maestri said that it would continue to buy despite the record price. “We really believe there is a lot of value in our stock,” he said.

Apple, which is based in Cupertino, Calif., also raised its quarterly dividend by 10.5 percent to 63 cents a share.

Jan Dawson, chief analyst at Jackdaw Research, said investors, too, are awaiting new iPhones. “What’s baked in the share price is a massive upgrade cycle,” he said.

A version of this article appears in print on  , Section B, Page 2 of the New York edition with the headline: Apple Profit Up, but iPhone Sales Fall in Anticipation of New Model. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT