Commentary

IPhone Sales Down, Profit Up For Q2

What do you want first, Apple fans -- the good news or the bad news? Getting the bad stuff out of the way, the tech titan sold fewer iPhones during its second fiscal quarter compared to the same period last year.

All told, Apple sold 50.8 million phones during the quarter ended April 1, which was off from the 51.2 million sold during the company's second quarter of 2016.

As for the good, Apple actually made more money from phone sales -- $33.2 billion, which was up from $32.9 billion -- meaning that the company is now making more moola per device.

What’s more, analysts are expecting a big sales boost when the next iPhone debuts in the fall.

As such, rather than fret about Q2 sales, Apple watchers should “hit snooze for 90 days,” as RBC analyst Amit Daryanani explained in a note to investors.

Overall, the company reported quarterly revenue of $50.6 billion and earnings per diluted share of $1.90 in the year-ago quarter. International sales accounted for 65% of the quarter’s revenue, according to Apple.

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Looking ahead to the next quarter, Apple said it expected to see revenue in the range of $43.5 billion to $45.5 billion, and gross margin between 37.5% and 38.5%.

This past quarter, Apple also announced plans to cut the commissions it pays on apps and in-app purchases from 7% down to 2.5%.

While Apple didn’t offer much by way of explanations, the change was likely the result of declining app sales. To address that issue, the company also recently added lower-price tiers to the App Store.

Still, the App Store continues to generate ample profits. Last year, App Store developers earned over $20 billion -- up more than 40% from 2015 -- according to recent figures from Apple.

That brought the total amount that developers have earned since the App Store’s debut in 2008 to around $60 billion. This past holiday season, customers broke all-time records, with purchases from the App Store surpassing $3 billion in December.

In the same month, Nintendo’s Super Mario Run made history with more than 40 million downloads in just four days after its release -- making it the most downloaded app globally on Christmas and New Year’s Day.

Worldwide, Super Mario Run is among last year’s Top 10 most downloaded apps, with Pokémon Go taking the top spot.

While China experienced record year-over-year growth of 90%, the United States remains the App Store’s top growing market.

As of March, the App Store offered around 2.2 million apps -- up more than 20%, year-over-year.

This column was previously published in Moblog on May 3, 2017.

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