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Apple’s Q1 Reflects iPhone Troubles Amidst Healthy Growth from Other Segments

January 30, 2019

Except for iPhone sales, Apple’s fiscal first quarter financial results, released yesterday, reflect positive trends for the company.

Apple quarterly revenue

Apple’s total revenue, $84.3 billion, was down 5 percent from the prior year’s quarter. iPhone revenue drove the decline, down 15 percent from the prior year’s quarter, while all other segments grew — just not enough to offset the drop in iPhone sales.

Apple segment Y/Y revenue growthApple Q1 segment revenue

While the volumes of RF components in the Apple Watch, iPad and Mac are growing, the content driver for the RF semiconductor industry remains the iPhone.

Apple CEO Tim Cook attributed iPhone softness to

  • A weakening economy in some countries, particularly China. Cook said Apple’s revenue decline in Q1 “was driven by our performance in greater China.”
  • The strong U.S. dollar, which makes the iPhone more expensive outside the U.S., with the biggest impact in developing countries.
  • Fewer operators providing subsidies for consumers to buy new iPhones, particularly in markets outside the U.S., which makes consumers more sensitive to foreign exchange swings.
  • Users keeping their iPhones longer, after Apple introduced an inexpensive battery upgrade program.

To address what it can, Cook said Apple is making it “simple” for consumers to trade in their iPhones at an Apple store, also “making it easier for people to pay for their phones over time with installed payments.”

Apple is no longer reporting the number of iPhones sold each quarter. However, for the first time, Apple disclosed the base of iPhones: now greater than 900 million devices, adding almost 75 million during the last year and growing year-over-year in all five geographic segments. That’s good news for Apple’s RF component suppliers, as well as Apple’s services business, an ecosystem that builds on the company’s hardware platforms.

Apple’s CFO, Luca Maestri, said the XR is the most popular iPhone model, followed by the Xs Max and Xs.

Apple’s Q2 revenue is expected to be between $55 billion and $59 billion; the midpoint of the range represents a 7 percent decline from the prior year’s quarter, as Apple continues to face uncertainty in China and with foreign exchange headwinds.