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Weaker iPhone sales bring down Apple’s profit margin forecast, shares

| Oct 28, 2016 03:49 AM EDT

An Apple iPhone 7s is seen in the upgraded Apple store on Regent Street on October 13, 2016 in London, England.

If the recent slide in Apple's shares is any indication, the glorious days of the iPhone seems to be something passé. The Cupertino-based tech giant's shares slumped by 4 percent on Oct. 26, Wednesday, following a drop in forecast the expected profit margin.

On Oct. 25, Tuesday, Apple forecast profit margins ranging from 38.0 to 38.5 percent for the current quarter, which is lower compared to the average analyst approximation of 38.8 percent. This, in turn, has and given rise to concerns regarding the company's ability to get the most out of on enhanced demand for its phones with larger screens, which actually bring in more money, Reuters reported.

The iPhone 6, which was introduced in 2014, was hugely popular. The success of iPhone 6 encouraged Apple to work hard to ignite consumer passion for the iPhone and endeavor to make it better seller each successive year.

The problems faced by Apple vis-à-vis its iPhone sales became evident on Oct. 25 following the release of the company's financial results for the quarter ended Sept. 24. In fact, the tech giant reported its third consecutive quarter of pathetic iPhone sales.

What is more significant is that the financial results marked the company's first fiscal year of weaker phone sales since it launched the best-seller device in 2007. Sales and profit for the year were also down.

On the other hand, the iPhone 7, which was introduced last month, failed to reignite consumer interest despite its camera and water resistant feature. Many consumers feel that the device looks very similar to the iPhone 6 and, hence, are not very keen to upgrade their existing phones.

While the demand for the iPhone 7 Plus is strong, especially for its two powerful cameras, Apple seems to have been caught napping, leading to a supply crisis. This may, in turn, have a negative impact on its sales during the ensuing holiday season, CNET reported. This is really unfortunate for the tech giant, as its price is higher compared to iPhone 7 and would have raked in more money for the company.

Contrary to this, a section of the investors were looking forward to a much stronger forecast from the tech titan. This was mainly because the reputation of its competitor Samsung Electronics has taken a blow following the recall of the company's flagship Galaxy Note 7 owing to its vulnerability to catch fire.

Last quarter, Apple sold 45.5 million iPhones, five percent lower compare to the 48 million units it sold in the corresponding quarter last year. Nevertheless, the tech titan's performance was better compared to Wall Street's forecast of 44.2 million units.

Watch the launch of Apple's iPhone 7 earlier this year below:

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