Apple now announced financial formula for a third mercantile entertain (second calendar quarter) of 2016. For a quarter, Apple posted income of $42.4 billion and net quarterly distinction of $7.8 billion, or $1.42 per diluted share, compared to income of $49.6 billion and net quarterly distinction of $10.7 billion, or $1.85 per diluted share, in a year-ago quarter. As expected, a formula paint a second uninterrupted year-over-year declines in quarterly income and iPhone sales.
Gross domain for a entertain was 38 percent compared to 39.7 percent in a year-ago quarter, with general sales accounting for 63 percent of revenue. Apple also announced a quarterly division remuneration of $0.57 per share, payable on Aug 11 to shareholders of record as of Aug 8. The association now binds $231.5 billion in income and blurb securities, partially equivalent by $68.9 billion in long-term debt.
Apple sole 40.4 million iPhones during a quarter, down from 47.5 million a year earlier, while Mac sales were 4.25 million units, down from from 4.8 million units in a year-ago quarter. iPad sales were also down once again, descending to 9.95 million from 10.9 million.
“We are gratified to news third entertain formula that simulate stronger patron direct and business opening than we approaching during a start of a quarter,” pronounced Tim Cook, Apple’s CEO. “We had a unequivocally successful launch of iPhone SE and we’re anxious by customers’ and developers’ response to program and services we previewed during WWDC in June.”
Apple’s superintendence for a fourth entertain of mercantile 2016 includes approaching income of $45.5–47.5 billion and sum domain between 37.5 and 38 percent.
Apple will provide live streaming of a mercantile Q3 2016 financial formula discussion call during 2:00 PM Pacific, and MacRumors will refurbish this story with coverage of a discussion call highlights.
Conference Call and QA Highlights are accessible in retreat consecutive sequence after a jump.
3:02 pm: Apple’s gain call has concluded.
3:02 pm: Cook: We consider of a new Apple TV as a substructure for what we can do in a space. we don’t wish to be some-more accurate than that. Don’t demeanour during what’s there now and consider we’ve finished what we wish to do. We’ve built a substructure that we consider we can do something bigger off of.
3:01 pm: Question asked about Apple TV and a broader streaming TV/content ecosystem.
3:01 pm: Maestri: iPhone SE has downward impact on iPhone ASP of course. Slightly dilutes association margins, though impact is not utterly large.
2:59 pm: Maestri: iPhone SE is doing accurately what it intended. We are saying a aloft rate of new-to-iPhone customers, that is apparently unequivocally critical to us, as we move new people into a iOS ecosystem. We see a aloft rate of prior iPhone owners who unequivocally cite a 4-inch phone factor. We have not seen transparent justification of cannibalization from iPhone 6s/6s Plus. What is most some-more applicable to us is a event to move some-more people into a iOS ecosystem.
2:57 pm: Cook: RD expansion rates are still unequivocally vast on a year-over-year basis. Products that are in RD … there is utterly a bit of investment in products and services that are not now shipping or derivations of what is now shipping. we don’t wish to pronounce about a accurate separate of it, though we can demeanour during a expansion rate and interpretation there is a lot we’re doing over stream products.
2:56 pm: Q: From an RD expansion perspective, how most is associated to existent products and services contra what is entrance next?
2:55 pm: (Side note: Cook indeed called them Pokémans).
2:54 pm: Cook asked about Pokémon GO, says it is a covenant to what can come from innovative apps. He says that AR can be unequivocally great. Apple continues to deposit a lot in AR for a prolonged run. Great things for customers. Great blurb opportunity. The series one thing is to make certain a products work good with other developers’ kind of products like Pokémon.
2:52 pm: Cook: Apple’s income tends to rise following product launches in China. There’s a aloft high and a reduce low in China compared to other markets. What we are doing is innovating like crazy and delivering a best smartphone to a business there. If we do a unequivocally good pursuit of that, that we will, I’m assured we will do good there.
2:51 pm: Cook: iTunes Movies and iBooks Store shutdowns in China are not a revenue-related matter, as they were earning rebate than $1 million in income when operational in China. Apple is operative unequivocally closely with supervision agencies to make those services accessible in China again in a future. Apple is optimistic.
2:50 pm: Q: Tim, can we give us your viewpoint on removing services behind adult using in China and convalescent marketplace share in a country?
2:50 pm: Cook: iPhone direct is finished adult of upgraders, switchers, and new-to-smartphone customers. Smartphone invasion is 42% during finish of quarter, utterly of bit of room there. Mostly in rising markets. Apple has had reasonable business success in rising markets. On switcher side, we unequivocally like what we’re seeing. As a iPhone becomes some-more essential to customers’ day-to-day lives, we consider people will put some-more and some-more concentration on what they’re buying. The thing that Apple does best is yield a torpedo user knowledge that is integrated opposite a line. we also consider a deployment of AI record is something we will surpass during since of a concentration on user experience. So, we like that. From an ascent indicate of view, there are plusses and minuses as we see it. A and is that some-more and some-more people have already assimilated ascent programs. Some of these programs, such as ours, reinstate a smartphone each singular year. Some carriers have identical programs where a iPhone is altered adult each year — some others are 18, 24, or 30 months. Today, there are apparently a lot some-more people on those programs than ever before. The rebate side is that … a miss of a funding can be a startle for people, utterly in a U.S., who were used to profitable $199 before and now compensate full cost with a reduced cost of service.
2:46 pm: Q: How is a iPhone Upgrade Program doing? Is Apple meditative about ways to sell a iPhone and some-more of a products on a monthly form subscription basis, maybe in a bundled basis?
2:44 pm: Maestri responding doubt associated to sell-through/channel register reductions: “Apple reduced channel register on not usually iPhone, though many other products … Even with sell-through adjustments, superintendence for Q4 is still in line with a past.”
2:41 pm: Cook questioned about a future, and a iPhone 7 being usually an incremental upgrade, and refuses to criticism on iPhones that have not been announced. He instead reiterates about a vast series of switchers and new height updates entrance in a tumble like iOS 10 and macOS Sierra. Cook also unequivocally likes what he has seen with a iPhone SE, says a cheaper phone is opening doors to business Apple wasn’t reaching before. Also satisfies business who were looking for a rested 4-inch smartphone.
2:38 pm: Maestri talks about how Apple is traffic with a stronger U.S. dollar environment, and hedges appropriately. Apple feels that a sum domain of 37.5 to 38 percent sum margin, notwithstanding these FX headwinds, speaks agreeably to a company’s tough work recently.
2:37 pm: Q: Luca, as it relates to sum margin, a superintendence is unequivocally identical to a past 5 years for Jun vs. Sep buliding … But there is something else/an combined cause impacting a guidance?
2:35 pm: Cook: We’re unequivocally unapproachable of a developer community. Developers are earning a lot some-more income essay for iOS than for other platforms. We now have over 2 million apps in a App Store and we are some-more focused these days on find and other things to move some-more good apps to a service. There are so many out there. Apple TV, CarPlay, HomeKit, and other services are providing users with a seamless experience.
2:34 pm: Q: we wanted to ask we about your height strategy…
2:33 pm: Cook: We are not going to get into products or product transitions. We did see enlivening signs from final quarter, with double-digit expansion in markets like Japan, Brazil, Russia, and Canada. We’re also unequivocally happy with a switcher rate — a tip ever we’ve ever recorded. Highest comprehensive series of switchers ever over a past 9 months. We consider services will continue to grow unequivocally briskly.
2:32 pm: Q: What can we tell us about a timing of a new iPhone model? Where is a strength entrance from in a Sep quarter?
2:31 pm: Cook: On a line side, and for a Sep quarter, we see NAND being flattering most in balance, while DRAM and LCDs and other line sojourn in an oversupply situation. Overall commodity prices we design to decline.
2:30 pm: Maestri: Flat to somewhat down sequentially. On a certain side, we will have leverage, as we are running towards a consecutive boost in revenue. We design to have a certain brew as we get into a Sep quarter.
2:30 pm: Q: Luca, can we pronounce about sum margins? Commodity pricing?
2:29 pm: Cook: We’re constantly looking on a outward for good talent and good egghead property. We have been shopping companies on normal each 3 to 4 weeks. We continue to do that. We consider we’ve finished some unequivocally good choices there. In terms of a investment in Didi, it was an surprising investment in that, we know, we don’t have a prolonged story of doing a lot of these, though we’ve finished these. We invested in ARM. From a Didi indicate of view, we see it as (1) as good financial investment, (2) vital things a companies can partner on over time, and (3) Apple can learn a lot some-more about a Chinese marketplace by Didi.
2:28 pm: Q: Tim, can we pronounce about your thoughts on investments? You finished a Didi investment this quarter. Acquisitions. Where are we putting your investment dollars from an acquisition/equity standpoint?
2:27 pm: QA event beginning.
2:26 pm: Maestri: Apple expects income to be between $45.5 billion and $47.5 billion in Q4 2016, compared to $51.5 billion in Q4 2015.
2:25 pm: Maestri: Apple returned $13 billion to shareholders final quarter.
2:25 pm: Maestri: Apple has $231.5 billion in income and blurb securities. $1.4 billion decrease.
2:23 pm: Maestri: Among U.S. consumers formulation to squeeze a inscription in a subsequent 6 months, 63% devise to squeeze an iPad. iPad Pro is a tip device that those business intend to purchase.
2:20 pm: Maestri: Services now criticism for 11% of Apple’s altogether revenue, adult from 8% in a year-ago period.
2:20 pm: Maestri: We set a new record for business transacting on a iTunes Store. Average volume spent per patron was a tip ever measured.
2:19 pm: Maestri: iPhone continues to uncover movement in business market. 75% of impending corporate buyers intend to buy iPhone in Sep quarter.
2:19 pm: Maestri: iPhone SE rollout point with iPhone channel register rebate resulted in reduce iPhone ASP of $595. Apple expects iPhone ASP to urge in Q4 2016.
2:18 pm: Maestri: $10.6 billion income flow. iPhone channel register reduced by 4 million units. Sell-through down by 8%.
2:17 pm: Apple CFO Luca Maestri is now talking.
2:17 pm: Cook says Apple has implausible products in a tube and is unequivocally bullish about a company’s future.
2:16 pm: Cook: 3 out of 4 contactless payments finished with Apple Pay. More than 11 million contactless locations/points of sale in all participating Apple Pay countries. Apple Pay is now live in 9 markets, including 6 out of Apple’s tip 10 markets.
2:13 pm: Cook: We have focused a AI efforts on facilities that best raise a patron experience. For example, appurtenance training enables Siri to learn difference and a vigilant behind them, and can afterwards broach smarter, some-more accurate responses.
2:13 pm: Cook is reflecting on new facilities that business can demeanour brazen to this tumble with iOS 10, macOS Sierra, watchOS 3, and tvOS 10, such as improvements to Siri, Messages, and Continuity.
2:11 pm: Cook: India is one of a fastest flourishing markets. iPhone sales in India adult 51% year-over-year in a initial 3 buliding of this year. Cook confirms Apple’s skeleton to open sell stores in a nation in a future.
2:10 pm: Cook talks about banking headwinds inspiring income gain in Greater China region, such as a stronger Hong Kong dollar.
2:09 pm: Cook: iPhone implement bottom in China has grown by 34% over a past year.
2:08 pm: Cook reflects on Apple Watch‘s tip patron compensation rating among smartwatches awarded by JD Power. He does not criticism on any specific sales.
2:07 pm: Cook: Our consult shows that half of iPad Pro purchasers are shopping them for work. Ultimate ascent for existent iPad users. Ultimate deputy device for business switching from PCs.
2:07 pm: Cook: We design a services difficulty to be a distance of a Fortune 100 association by subsequent year.
2:06 pm: Cook: App Store income adult 37% to an all-time high.
2:06 pm: Cook: Switchers from Android and other platforms accounted for a tip commission of iPhone buyers than ever before.
2:05 pm: Cook: iPhone SE is renouned in both grown and rising markets. Sales to new-to-iPhone business are larger than in prior years.
2:05 pm: Cook says iPhone SE direct outstripped supply by a whole Jun quarter.
2:04 pm: Apple reduced channel register by $3.6 billion. Sell-through was considerably larger than sell-in.
2:04 pm: Cook says that today’s news reflects several enlivening signs that Apple did not design even 90 days ago.
2:02 pm: Apple CEO Tim Cook will pronounce first, followed by CFO Luca Maestri.
2:02 pm: Apple’s earning call is beginning.
1:47 pm: iPhone normal offered cost (ASP) declined to $595 from $642 final quarter, due in vast partial to a iPhone SE. On a flip side, iPad ASP rose to $490 from $430 due to a aloft labelled 9.7-inch iPad Pro compared to a prior iPad Air 2.