Apple iPhone revenue drops 12% but Wearables are the star of Apple's fiscal Q3

Apple iPhone revenue drops 12% but Wearables are the star of Apple's fiscal Q3
Apple this afternoon reported its fiscal third-quarter earnings covering the three month period from April through June. The company said that iPhone revenue hit $25.99 billion during the quarter, down from the $29.47 billion it recorded one year ago. That is a 12% decline on an annual basis and was lower than Wall Street expectations. For the nine months ended in June, Apple rang up $109 billion in handset revenue versus the $128.1 billion it took in over the same period in 2018.  It was the first time since 2012 that Apple's iPhone sales failed to make up 50% or more of the firm's revenues for a quarter. During the fiscal third quarter, sales of the iPhone contributed 48.3% to Apple's total revenue of $53.8 billion.

Sales of the Apple iPad continue to do better than the tablet market as a whole. During the company's fiscal third quarter, revenue attributed to the device rose from $4.63 billion to $5.02 billion. Last quarter, the iPad recorded its strongest revenue growth in six years. The turnaround started with the release of two new iPad Pro models last year and a new iPad Air and new iPad mini this past March.

Apple's Wearables unit turns in a very strong performance

Apple is expecting its Services unit to help make up for the sluggish performance of the iPhone. The tech giant is banking on a large number of active iPhone users to take this unit to $50 billion in revenue next year. For the latest quarter, the division grossed a record $11.5 billion compared to the $10.2 billion it generated last year. This unit, Apple's second-largest and it's most profitable, includes recurring subscription services such as Apple Music, Apple News+ and the upcoming Apple Arcade. It also includes AppleCare, ApplePay, the App Store, iCloud and more.

Led by the AirPods wireless earbuds and the Apple Watch, the Wearables, Home and Accessories segment was extremely strong with sales of $5.53 billion during the three month period. During the same quarter last year, this unit took in $3.73 billion.

Sales backed off in China as expected due to the strength of the dollar and the current trade war between the U.S. and China. And we can't forget that some Chinese consumers are individually boycotting Apple to protest the placement of Huawei on the U.S. Commerce Department's Entity List. The manufacturer's inclusion on the list prevents Huawei from accessing its U.S. supply chain. For the quarter, Apple had sales of $9.16 billion in the country, down from last year's $9.55 billion. Revenue also declined slightly in Europe to $11.93 billion while rising in the Americas ($25.06 billion), Japan ($4.08 billion) and the rest of the Asian Pacific Market ($3.59 billion).

After the results were released, investors rushed to buy the stock. In after-hours NASDAQ trading, Apple is up $9.16 or 4.4% to $217.94. Once again, the company is closing in on a valuation of $1 trillion. Almost exactly one year ago, Apple became the first publicly traded U.S. company to reach such a lofty valuation.

For its fiscal third quarter, Apple reported a net profit of $10.04 billion, down from $11.52 billion last year. Earnings per share on a diluted basis (all convertible shares accounted for) declined from 2018's $2.34 to $2.18.



1. Cat97

Posts: 1983; Member since: Mar 02, 2017

Great news for consumers. Hopefully all manufacturers will learn that increasing prices does not mean more revenue or more profit. This price craze copied from Apple (like many other things) destroyed a few manufacturers: HTC is gone, Sony is almost gone, LG will not last long, Google probably pumps money from outside into their Pixel line to keep it afloat. Samsung is smarter: they claim high prices on paper but you can buy their phones at the "old" normal prices within just a few weeks after launch.

2. mackan84

Posts: 644; Member since: Feb 13, 2014

Lets say they would had skipped the XR and sold XS/Max for $699/799. That would’ve been a profit-margin of around $300-400 and Apples Q3 would’ve been a total disaster, because they would’ve not sold more, probably a lot less without XR. Smartphone-sales declines all over the world, especially for Apple. People don’t upgrade unless the sh*t is broken or unsupported by a popular app, this is why everyone raises the prices of their flagships.

16. djcody

Posts: 237; Member since: Apr 17, 2013

Sales decline only of high prices not because consumers don't want to buy a new phone.

20. sgodsell

Posts: 7605; Member since: Mar 16, 2013

Apple killed off their SE lineup, Apple has killed off their other iPhones with touchID. Has significantly raised the price of not only the new iPhones, but their services as well. Apple's new low priced iPhones are the R line. Which are cheap hardware at higher prices. It's $750 USD ($1030 CAD) for the XR. No wonder why Apples iPhones revenue has dropped, but that also means a significant drop in the actual number of iPhones that actually sold. No wonder why Apple stopped reporting their actual numbers. Carriers are still selling iPhone SE's, 6S, 7, and 8's.

30. Vokilam

Posts: 1387; Member since: Mar 15, 2018

Do you get paid for spewing this on every Apple article? It’s the same thing over and over. Your analysis is so immature my 8 year old can write a better conclusion. Give it up - your posts are like annoying ads that have no relevance.

75. Vancetastic

Posts: 1794; Member since: May 17, 2017

He’s got a “thing” about Apple. I find it weird.

91. oldskool50 unregistered

You're just mad because he is right and the sales numbers says he is. Apple sales started to fall with the iPhone 7, when they jacked up the price by over $100 vs the 6/6S models. Right then and there, sales went down. The iPhone X didn't sell well, not because it wasn't a cool beautiful phone, because I love the design overall, I just don't like the notch. But it was not worth $999...PERIOD!!!! In fact I want you to find me a phoen with the same specs as the XR/XS/XS Max and see how much they cost in comparison. To be fair, I do understand Android phones, because of real competition has a price cap in certain areas. But no matter what price range you choose, you can find a phone that will work for you. But if you want a phone, that doesn't have to many bells and whistles, you can get a very nice spec'd Android for ANY OEM for 40-60% less than an iPhone for the sa,e specs and capabilities on many levels. In fact, as much as I did not like the Galaxy S7 edge, you can buy one right now brand new ofr under $400 and it is still spec'd better than the XR. That is sad when you consider the fact that brand new both phones are $750. You just mad that he is right and now that Apple has peinted themselves into a pricing corner, dropping price would make them look stupid, and keep the price the same or increasing them will result in fewer sales The main reason the S and Note had a huge drop in sales is because of the increase in price. But Samsung gained many of those sales with their higher mid-ranged models like the A and M series. Apple doesn't offer a brand new phone you can buy for $400-700 and its gonna kill them. And you're pissed because he is right. A fact is a fact bruh. Too bad you can't handle the truth.

34. iloveapps

Posts: 909; Member since: Mar 21, 2019

When was the last time Samsung reported mobile sales?

92. oldskool50 unregistered

What OEM ever has? NONE OF THEM!!!

41. iloveapps

Posts: 909; Member since: Mar 21, 2019

Sgodsell AKA analyst: What can you say about Samsung 56% profit decline? Is it really about weak memory chip sales or weak Galaxies sales?

44. c.m.s

Posts: 239; Member since: Dec 10, 2017

Not true at all, prices is just one reason people don’t upgrade as often today. For me and alot of people the reason is because there is no need to upgrade. Todays phones are so good and new phones do not bring enough to the table to make me want to upgrade.

93. oldskool50 unregistered

Though I agree and you can have it both ways, the fact is, when prices were low and carriers were subsidizing 1/2 the price on phones, it made it easier to upgrade every year. Now in order to have a phone in the US, if you can't afford to pay cash or don't want too, then your only option is to take a 24 month payment plan and have $50+ added to your bill per month plus taxes for whatever how many phones you decide to buy. Buying 2 phones in the past would have cost $700+ taxes. Now 2 phones cost you $2000 for a premium model. That's a huge gap due. So price is the main reason. As far as upgarding every year. if the price is low enough, it doesn't matter if you need a new phone, you will simply upgarde because you can get a good price. When I was paying $299 for a S or Note, I didn't mind upgarding every year, because I would sell my older phone and use that money to get the latest one. Now in 12 months only 50% of a phone may be paid for. if you aren't on a phone lease on on demand upgrade plan, that means you either would need to pay the phone off before you trade, or buy the new one cash or add a new line and drop the other line later. I upgrade every year. But thanks to prices, I now can't because its simply too much. if I can get a BOGO deal, then gettign 2 phones for $1000-$1200 together is not to shabby. But paying that for one phone is foolish regardless of how much money you have. Because just because it is the price, that doesn't make it worth the price, and even if it is worth the price, that doesn't mean I have to pay it.

45. mackan84

Posts: 644; Member since: Feb 13, 2014

Keep telling yourself that. If that were the case the whole world would buy cheap phones every six months, why not Samsung who lower prices after six months. Or a Xiaomi.... No sales still declines.

90. oldskool50 unregistered


48. Mike88

Posts: 438; Member since: Mar 05, 2019

I don't know if it's true or not, people who loves buying new phones still do that.. My iPhone X was perfect but I still bought XS, now my XS is perfect but I'll still buy the next iPhone. I'm not on some upgrade plan and always keep my old phones.. I'm sure people who are passionate about using new tech every year still upgrade regularly..

49. mackan84

Posts: 644; Member since: Feb 13, 2014

Wasn’t it a article just a couple of days ago that showed a 6% decline in smartphone sales worldwide or US or something like that. Have to write these things down to prove my point. Seems like no smartphone enthusiast wants to see that as a truth and I don’t know why... Most people don’t see the need to upgrade something that works just as good as a new one except for some small improvements. Then we all would’ve upgraded our TVs, PCs or vacuum cleaners every year to.

74. oldskool50 unregistered

Well in retrospect, higher prices do result in higher profits. But if those high prices result in desline in sales, then the profit would have to fall too. Apple is gonna continue to fall. I've already said it and the point is very clear. The only reason Apple has high sales in the US, is because we don't have to pay cash for our phones. When carriers stopped subsidizing the cost by 50-70%, and instead placed the phone on the bill, it makes it easy to get a phone. If we had to pay cash for iPhone in the US, Apple sales would drop to less than 5M per year INSTANTLY. Proof of that is their Mac sales in the US. In most large populated countries in the world, Apple sells less than 1M phones per year. This is true of my 2nd home where Apple sold a total of 1.2M phones last year in a country with 150M citizens. Any fool here on PA who claimed prices have nothign to do with falling sales is a complete idiot, when these are the same fools who criticize Android sellers who ASP is lower than Apple, simply because they sell more cheaper phones. Apple and Samsung both sold far abd away more phones when they were less than $800. When the Note 7 came in at $850, for what I felt was just a design change from the Note 5, I knew trouble was starting. Today's Galaxy, iPhone or any other phone are not doing anything phones didn't do in 2013. They are just doing them in different ways. I see nothing about the Galaxy S or Note that has been worth the $300-500 price increase and that goes for Apple too. Samsung could have kept the Note at $850 max, and the S at $750 max, undercut Apple and they could have taken easily 30% of Apple sales away from them when they decided to go $1000. $1000 for the XR outside the US is a complete an uttered disgraceful amount of greed, when you consider the hardware. Apple is gonna lose another 20-50M iPhone sales because of the iPhone 11. Especially if they raise the cost by ANY amount. No phone is worth $1000. if I can get 2 phones for that price, I will buy. But not for just one. If we want prices to go back down, then we need to stop buying new phones until they do. Becaus ethat si the only way it stops and Apple is finding out the hard way. Samsung at least sells cheaper phones so you never have to buy a Note or S to begin with. But with the iPhone if you want the latest model, the price is the price and if you want it you gotta pay it at least with Android, you can get a brand new phone with newer hardware for less money than a flagships. After a while, Samsung will be the only OEM selling successful flagships.

107. wickedwilly

Posts: 752; Member since: Sep 19, 2018

The Note series were just as responsible for the price creep, except it offered so much more. As for "like many other things", look back and you can clearly see it is Apple doing the copying, iPhone X ring a bell?

3. whatev

Posts: 2427; Member since: Oct 28, 2015

They always get what they want as usual but I don’t know why they don’t seem to care about the smartphone market share, they could be the biggest smartphone manufacturer if they wanted to, it’s just like they don’t seem to care, and I mean they need to cover all segments and try to democratize the premium quality for more wallets

7. mackan84

Posts: 644; Member since: Feb 13, 2014

There is no profit in cheap phones and those customers rarely spend anything on google play or App Store, certainly wouldn’t spend on apples newer services either. They don’t need those customers, they need $1 billion plus devices spending a couple of hundred dollars each month on services and software.

8. whatev

Posts: 2427; Member since: Oct 28, 2015

If they reach more users maybe when those users can afford more premium phones they would go for the latest iPhone flagship and they would be willing to get the services and all the other things, they just need a taste, I know lot of android users who hate their budget phones to death but they won’t buy an iPhone because they can’t

47. mackan84

Posts: 644; Member since: Feb 13, 2014

Parents give those users a taste when they upgrade. They always hand the old one down to the kids, or the new one. Lyndon420 that’s money in googles services to :)

108. wickedwilly

Posts: 752; Member since: Sep 19, 2018

Your "theory" has a huge flaw, if they had the money many, if not most would buy a better Android phone. Let's face it iPhone users are flocking to Android as we speak!

118. whatev

Posts: 2427; Member since: Oct 28, 2015

Lmao, sure, that’s why all the oems have decreased in sales during this year except Huawei in China, they all are flocking to Huawei according to you, but they are flocking to China too then, your logic is so delusional that is cute lmao

18. OneLove123

Posts: 1267; Member since: Aug 28, 2018

I don't buy cheap phones and I don't pay for apps either. What's the point?

21. lyndon420

Posts: 6897; Member since: Jul 11, 2012

I've paid for maybe 3 or 4 apps, but mostly I just buy movies through the Playstore.

76. oldskool50 unregistered

"There is no profit in cheap phones." That is a lie. It simply has a lower profit margin. The reason Apple has such high profit is not the amount of sales, but the fact they pay very little and sell for quaite a lot. Android OEM's in most cases only sell a product on average, at 2-3 times what it cost them to make. Apple hardware in many cases on retail are 4-5 times what it costs to make or even higher when you see what they charge for accessories which are more as 100 times what they paid. That is not an exaggeration either. For several years, the Galaxy Note has cost Samsung rough $300-$350 to make, and they sold it for $650 for several years. Now the same phone is costing them $380-$420 to make so thus you can expect at least to pay $900 for it. But I don't see where enough has changed for the price to be this high. And I'm saying this for Samsung phones. So since iPhone does far and away less than Samsung's mid-range models, then the price of an iPhone which in the case of the XR cost them roughly $200 to make. Selling it for $1000 outside the US is a complete an uttered joke. And that is why their sales are declining and Apple has basically locked themselves in the high range. because if they all of a sudden drop the price, how will it reflect on them as a brand. Basically Apple is gonna end up exactly like that one Android brand that made an expensive luxury phone. They went out of business. Before 2025, Apple will be selling less than 100M iPhone, I guarantee it. Remember this post. And Samsung by 2025 will be selling less than 200M, if they don't do something about pricing. Samsung could easily sell the Note and S for $300 cheaper. They would then gain more sales, because they woudl get at least 50% of Apple sales too. This means more volume. Yes it means Samsung has to make more product, which adds more cost. But they will make the money over time, but instead they want to be like Apple and try to get it all at once.

4. Back_from_beyond

Posts: 1475; Member since: Sep 04, 2015

So iPhone revenue dropped $3.48billion worldwide, in China $0.39billion, "slightly" in Europe and is up in the other regions, doesn't that "slightly" come to more than $3billion revenue drop in Europe? Seems a rather significant drop.

5. iloveapps

Posts: 909; Member since: Mar 21, 2019

Waiting for Sgodsell aka Apple analysts.

11. darkkjedii

Posts: 31640; Member since: Feb 05, 2011

Apple's waiting on you to empty your 401K, and makeup that 12% drop.

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