January 31, 2017 Last Updated 1:25 pm

iPhone 7 sales drive strong Q1 for Apple; iPad unit sales continue to disappoint, falling another 19%

Revenue came in at $78.4 billion, up 3 percent year-over-year, and a record, but made possible by a 14-week quarter

Apple today reported its first quarter 2017 earnings, which on the calendar is the fourth quarter of 2016, and includes holiday sales. Thanks to Samsung’s disaster with its own new smartphone, Apple saw enough new iPhone sales to declare Q1 2017 a record quarter.

“We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch,” said Apple’s CEO Tim Cook. “Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline.”

iPhone sales came in at 78.29 million, and overall revenue was up 3 percent. The iPhone 7 Plus sales grew to a larger share of overall iPhone sales as buyers turned away from the larger Samsung models (helped by the airlines, which told passengers to turn off their Samsung phones on flights due to their rather nasty habit of exploding).

But gone are the huge increases in revenue investors once saw with Apple, as sales of its other products other than the iPhone were not as robust.

The iPad continues to falter. Despite it being the holiday season, buyers stayed away from Apple’s tablet, with 13 million units sold versus over 16 million a year ago, and over 25 million sold in the same quarter of 2014. The problem, of course, is that the overall tablet market is faltering as readers are using their larger smartphones for reading, or a dedicated reader such as Kindle.

Mac sales were up 7 percent, the Other Products category, which includes the Apple Watch, was down 8 percent.

Apple had a good quarter in all its markets other than China, where revenue fell 12 percent. Revenue was up 9 percent in its Americas region.

Investors were expecting the worst, after a couple of disappointing quarters. Apple stock rose marginally after earnings were announced.

But Apple’s small gains in revenue were matched, actually exceeded, by rising costs. The result was that net income actually fell slightly in the quarter, when compared with earnings in the same time period a year ago.

One last point, which others have pointed out, as well: Q1 of Apple’s 2017 fiscal year was 14 weeks long. That’s right, they had a “leap quarter” which means that their record quarter, without the added week, would have actually been a slightly down quarter.

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