Apple beats analyst expectations despite drop in fiscal Q3 revenue, profit

Apple registered its second consecutive quarterly decline in iPhone sales in the three months to Jun. 25 -- the company's fiscal third quarter -- resulting in a 14.6 per cent year-on-year drop in revenue.

The U.S.-based vendor generated revenue of $42.3 billion (€38.4 billion) during the quarter, with the bulk of the decline attributed to lower iPhone shipments of 40.4 million units. Net profit fell 27 per cent year-on-year to $7.8 billion, largely due to the decline in iPhone shipments.

In an interview with Reuters, Apple CFO Luca Maestri explained that the company's performance in the recent quarter had been affected by foreign currency exchange rates. Comparisons of iPhone shipments were also skewed by strong sales of the vendor's iPhone 6 in the same period of 2015, he noted.

Maestri added that consumer demand for iPhones remained high, with shipments in the recent quarter topping Apple's expectations, Reuters reported. The CFO also looked beyond the headline figures, telling the news agency that Apple shed $3.6 billion from its channel inventory in the recent quarter.

Despite the declines in revenue and profit, Apple exceeded analyst expectations during the period. iPhone shipments were marginally higher than the 40.02 million average of analyst predictions, Reuters reported, citing figures from research company FactSet StreetAccount.

The vendor's fiscal third-quarter revenue also beat analyst predictions, the Wall Street Journal reported, citing Thompson Reuters figures that had tipped Apple to generate revenue of $42.1 billion during the period.

In Apple's earnings statement, CEO Tim Cook said the company's third-quarter results "reflect stronger customer demand and business performance than we anticipated at the start of the quarter."

Maestri noted in the statement that revenues from Apple's Services business grew 19 per cent year-on-year during the quarter, while revenue from the App Store "was the highest ever, as our installed base continued to grow and transacting customers hit an all-time record."

The company predicted that fiscal fourth-quarter revenue would be between $45.5 billion and $47.5 billion, and that it will generate a gross margin of between 37.5 per cent and 38 per cent.

For more:
- see Apple's earnings statement
- view this Reuters report
- read this Wall Street Journal article

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