Apple’s Earnings report on April 26, 2016 could be summarized as “devastatingly disappointing“, and investors are responding by a massive sell-off. In after-market sales, Apple lost 9% value in less than 1 hour.

apple share price

Apple’s Stock price Data Fact sheet

Apple sold almost 20% less iPhones in the second quarter when compared to the previous year (51.2 million vs 61.2 million).

This is hardly surprising considering the intense competition the iPhone faces.

“Cook also conceded that the iPhone 6S was driving customers to replace phones at a much lower rate than the 6. “I don’t mean just a hair lower; it’s a lot lower,” he said. “If we’d had the same rate on 6S as 6, it would be time for a huge party.””

iphone vs s7 edge

iphone 6S placed to the Galaxy S7 Edge

This year we see new android devices, such as the Mi 5 ($310 USD) which is faster than the iPhone ($649  USD without contract) but selling for half the price.  On top of that, Apple products no longer have the lead on premium quality and build. Samsung has greatly improved its phone design, with the S7 having a metal body instead of the cheap plastic bodies found in the S5.

Apple Q2 2016 Financial Results (GAAP)
Q2’2016 Q1’2015 Q2’2015
Revenue (in Billions USD) $50.557 $75.872 $58.010
Gross Margin (in Billions USD) $19.921 $30.423 $23.656
Operating Income (in Billions USD) $13.987 $24.171 $18.278
Net Income (in Billions USD) $10.516 $18.361 $13.569
Margins 39.4% 40.1% 40.8%
Earnings per Share (in USD) $1.90 $3.30 $2.33

On top of that, the budget phone category is not only usable, but becoming increasingly attractive. Phones like the Red Mi now have a premium looking aluminium body with awesome hardware to match.

All this results in a sales slump of almost 26% in the Greater China market – a market with budget Android phones are reigning supreme.

Sources:

http://www.computerworld.com/article/3062053/smartphones/apple-stumbles-in-worlds-biggest-smartphone-market.html

http://www.reuters.com/article/us-apple-results-idUSKCN0XN22I

http://www.forbes.com/sites/ralphjennings/2016/04/26/as-apples-net-income-falls-who-else-gets-hit/&cid=52779094088942&ei=xmEgV4DiCaj3iwKWp4TACw&usg=AFQjCNHJ5xzkfNp5X92TWYMfIRqZiezd7Q

http://www.anandtech.com/show/10283/apple-announces-q2-fiscal-year-2016-results-iphone-sales-slowed-but-services-gain

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