Apple Inc. (NASDAQ:AAPL)’s performance in 2016 remained very bumpy, necessitating preparing for the worst case scenario. Though this is the case, Apple has just recorded its biggest quarter with record revenues of $76 billion. The profits were $18.4 billion marking the most that any company has ever achieved. Yet, most of its biggest followers observe issues which signify why Apple is troubled.
iPhone, iPad and MacBook sales are declining
Tim Cook, Apple’s CEO noted during last earnings call that iPhone sales were about to decline. 68% of Apple’s revenue comes from the sale of iPhones. Thus a fall in iphones’ revenues signifies a significant dent in Apple’s revenue. To put things in perspective, a 10% decline in iphones’ revenue translates to a $5 billion decline in Apple’s overall revenues.
Both iPad and MacBook’s sales saw a decline of 25% and 4% respectively during 4Q15. This reduction will also affect the company’s revenue since the products are responsible for significant portion of the company’s revenue.
Investors are driving stock down
Over the last 12 months, Apple stock has declined by over 28% year-to-year basis. This is from $133 to $96. One of the primary attributors to the decline is that most analysts don’t expect iPhone 7 to relight Apple’s growth.
The release of new iPhone is always marked with the rise in the company’s stock price. Though expectations for iPhone7 are high yet people are worrying that iPhone 7 will not be new enough to spur a new energy in sales growth.
Leaks have suggested that the new phone will be much like iPhone 6S, and most analysts believe that sale bumps from this will not match that of iPhone 6. Another worrying factor is that iPhones are being so well made, eliminating the need to replace them on an often basis. This results in a reduction in demand.
iPhone has lost market share in every major market
iPhone has been facing stiff competition from Alphabet Inc (NASDAQ:GOOGL)’s Android enabled devices, Microsoft Corporation (NASDAQ:MSFT)’s Windows run devices and others. This has resulted in a fall in their market share globally.
Though the above are challenges, which Apple has to manage, the company has a history of always emerging tough with renewed growth and exciting products.