First ever profit decline recorded by Apple in 16 years

Apple earnings
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Apple announced its first ever decline in net profits when it released its results for the second fiscal quarter of 2016.

According to the results, a total revenue of $50.6 billion was recorded with a net profit of $10.5 billion for the quarter, down by $3.1 billion in the same quarter last year. A 6% reduction in Apple’s share price caused it to trade at $1.90 per share as opposed to $2.33 per share in 2015.

According to Apple’s results for Q1 2015, the company disclosed a total revenue of $58 billion dollars and a net profit of $13.6 billion.

Although the company has recorded its first decline in profit since 2003, CEO- Tim Cook addressed the issue by saying the ‘they are happy with the strong growth in revenue from ‘Services’. Apple provides on-demand services like Apple Music, TV Shows, Podcasts as well as Apple TV to a user base of over one billion devices.

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International sales accounted for 67% of the Q1’s earnings, with a dip in overall sales: iPhones (51 million devices compared to 61.2 in 2015), iPads (10.25 million from 12.6 million in 2015) and Macs (4.03 million units, down from 4.56 million in 2015).

With a gross margin of 39.4% for Q1 2016, the company expects to see it fall between 37.5 and 38% in Q2 2016, with a revenue of $41- $43 billion. Apple also announced that it will increase the limit on its share repurchase authorization, increasing it to $175 billion from the current $140 billion.

The company expects to spend approximately $250 billion in cash in lieu of their capital return program by March 2018. Proof of their word can be found in the announcement stating a $0.05 increase in divided per share for the quarter.

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