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Apple Likely to Report First Annual Revenue Decline in 15 Years

Tuesday, October 25, 2016 4:53
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iPhone 7Tech titan Apple Inc. (NASDAQ:AAPL) is slated to deliver its latest earnings results after the closing bell today. Here’s what to expect.

The company’s pace of growth has been slowing for years, and now it’s time to pay the piper. When Apple reports its fiscal fourth quarter earnings this evening, full-year 2016 sales totals are expected to be lower than 2015’s results — representing the first annual sales decline since 2001.

Ironically, 2001 represented the culmination of Apple’s comeback as a technology powerhouse. It launched the ultra popular first generation iPod that year, as well as its now-venerable OS X operating system.

When looking back, will 2016 mark a similar turnaround? Possibly. If it does, it will likely be as a result of another handheld device: the iPhone. From Bloomberg:

After releasing a new version of its bestselling device in September, Apple likely sold 45 million units of all types of iPhones in the most-recent fiscal quarter ending Sept. 24, according to Wall Street estimates. Revenue probably slipped for a third straight quarter, by 9 percent, though that’s smaller than the 15 percent decline in the preceding period, forecasts indicate.

Today’s report will give investors the first concrete sales numbers for the iPhone 7. For the first time in the device’s history, Apple refused to offer initial sales results just after the its release last month. The reasons why are unclear, but many speculate it’s because the company was afraid demand wouldn’t be all that impressive.

Like it or not, the company lives and dies by the iPhone, as has done so for years. Investors will no doubt focus almost solely on iPhone 7 sales when Apple reports results later today.

With its smartphone market share waning, the company needs to device to be a big hit, and for it to provide an effective bridge to its completely redesigned phone coming next year.

Apple shares rose $0.56 (+0.48%) to $118.21 in premarket trading Tuesday. Year-to-date, AAPL has gained 11.77%, more than doubling the 5.41% return of the benchmark S&P 500 during the same period.


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