With iPhone sales and profits sliding, Apple sought to highlight its growth in services on Tuesday as it seeks to reduce dependence on its main cash driver.
In its quarterly update, Apple said profits slumped 27% from a year ago to $7.8 billion on a sharp drop in iPhone sales. Apple sold 40.4 million iPhones in the quarter ending June 25, down 15% from a year earlier, highlighting concerns over growth for the company’s iconic smartphone. It was the second straight quarter of slumping iPhone sales for the company, which until then had seen uninterrupted growth.
Overall revenue was down 15% from a year ago at $42.4 billion for Apple, which is the world’s most valuable company.
CEO Tim Cook said the results showed “stronger customer demand and business performance than we anticipated at the start of the quarter.”
Investors appeared to be reassured by the results, which were generally better than expected, with Apple shares rose 6.1% in after-hours trade to $102.61.
The results underscored the challenges for Apple, which has built a huge business around the iPhone, but is unlikely to see continued growth, due to a saturated smartphone market and increased competition.
The company said its iPad unit sales meanwhile fell 9% from a year ago, but revenues rose due to the launch of higher-priced tablets. Mac sales were down 11%. Apple also said its services revenue rose 19% year-over-year.
“The growth was broad-based with App Store revenue up 37% to an all-time high,” Cook said in a conference call.
By Sophie Estienne and Rob Lever, Copyright Agence France-Presse, 2016
Falling International Sales Are Making Coca-Cola Flat
The sluggish global economy, more and healthier competition, and currency market turbulence again dragged on Coca-Cola Co.’s earnings in the second quarter, the company said Wednesday.
Net earnings rose 10.9% and core earnings per share beat expectations by two cents at 60 cents. But net revenues slid in every region but North America, for a 5.1% fall overall in net sales from a year ago to $11.5 billion.
Sales of concentrate and cases were flat in volume terms, with the company saying slowdowns in emerging markets like China and Argentina offset gains in the United States, Mexico and Japan. Volume sales of soda drinks fell slightly in the quarter, but that was compensated for by gains in sales of bottled water and juices, the company said.
But Atlanta-based Coke said its bottom line was hit significantly by the strong dollar’s impact on earnings from countries with weak currencies, and would continue to be a headwind for the rest of the year. For the second quarter, the global soft drinks king reported that lower taxes and lower extra costs helped bolster the bottom line. Net income was $3.45 billion, compared to $3.11 billion in the year-ago quarter.
Copyright Agence France-Presse, 2016
Mondelez Combats Sales Slump With Cost Cutting, Lifting Profit
Mondelez International Inc., the global snack giant that recently made a bid to acquire Hershey Co., posted second-quarter earnings that beat estimates after cost cuts helped offset sluggish sales.
Profit was 44 cents a share, excluding some items, the Deerfield, Illinois-based company said Wednesday in a statement. Analysts estimated 40 cents on average. Sales fell 18% to $6.3 billion, just shy of analysts’ average projection of $6.33 billion.
Mondelez, the maker of Oreo cookies and Ritz crackers, is trimming expenses in the face of sluggish international markets, where it generates most of its revenue. CEO Irene Rosenfeld also has been under pressure to expand the company’s profit margins, which have trailed those of food-industry competitors. The recent offer for Hershey, which was rejected by the chocolate maker, was seen as an effort to increase Mondelez’s exposure to the U.S. market.
The shares fell 1.1% to $44.73 in early trading after the results were released. Mondelez’s stock had gained 0.9% this year through Tuesday’s close.
By Craig Giammona, Bloomberg
