New York, Bengaluru: Apple Inc posted its third successive quarter of declining iPhone sales on Tuesday and forecast slimmer-than-expected profit margins over the upcoming holiday season even as it projected record sales, sending its shares down.

The world’s most valuable publicly traded company said improved sales from China were around the corner, despite revenue falling almost 30 per cent from the country in the latest quarter. It said sales so far to India have only scratched the surface.

But a slight miss on fiscal fourth-quarter revenue and a projection of gross profit margins a touch behind analyst targets reflected broader concerns that Apple may have lost its tech superiority, even with the refreshed iPhone 7.

“In essence, in China and elsewhere, while Apple’s products are still seen favourably, the distance between Apple and its competitors is nowhere near as great as it once was,” Neil Saunders, head of retail research firm Conlumino, wrote in a note.

Apple shares fell 2.8 per cent to $114.99 (Dh422.35) in after-hours trading.

The company’s net income fell to $9.01 billion, or $1.67 per share in the quarter from $11.12 billion, or $1.96 per share, a year earlier. That beat the average estimate of $1.66 per share.

Apple’s fortunes are strongly tied to the success of the iPhone, which accounts for two-thirds of its revenue.

Chief Financial Officer Luca Maestri said in a phone interview with Reuters it was “impossible to know” if there was any effect yet from rival Samsung Electronics Co Ltd halting production of its fire-prone Galaxy Note 7 phones earlier this month.

He also said that Apple was “supply constrained” and selling all the smartphones it could make.

“It’s clear that Apple is bullish about growth in the iPhone, but there’s little evidence of that growth in the actual results announced today,” said analyst Jan Dawson of Jackdaw Research.

“Given that the iPhone 7 and especially the iPhone 7 Plus is in short supply, Apple is going to be a little constrained in its ability to take full advantage of the strong demand we’re seeing,” he added.

 

Natural pause

Apple said it sold 45.51 million iPhones in the three months ended September 24. That beat the average analysts’ estimate of 44.8 million, according to research firm FactSet StreetAccount.

Revenue fell 9 per cent to $46.85 billion, a touch behind Wall Street targets, according to Thomson Reuters I/B/E/S. Apple forecast revenue of $76 billion to $78 billion for the current, holiday-dominated quarter, ahead of the consensus estimate of $75.08 billion.

If it hits that estimate, this quarter would be Apple’s biggest on record by sales, ahead of the $75.9 billion revenue it posted in the year-ago period.

However, Apple offered a conservative outlook on profit margins, 38 to 38.5 per cent, versus expectations of nearly 39 per cent, said Mariann Montagne, senior investment analyst and portfolio manager at Gradient Investments.

“I think people were a bit surprised,” said Montagne, whose firm holds Apple shares.

 

Reliance Jio to boost iPhone experience: Cook

San Francisco: Announcing that the sales of iPhones were up 50 per cent in India in fiscal 2016, Apple CEO Tim Cook has said that the Cupertino-based company is partnering with Reliance Jio to ensure great iPhone experience for its users.

“Reliance Jio is rolling out a first of its kind all-IP network in India with 4G coverage in 18,000 cities and 200,000 villages across the country. They’re offering a free year of service to purchasers of new iPhones and we’re partnering with them to ensure great iPhone performance on their network,” Apple’s CEO Tim Cook said during the company’s earnings call on Tuesday night.

“Our iPhone sales in India were up over 50 per cent in the fiscal 2016 compared to the prior year and we believe we are just beginning to scratch the surface of this large and growing market opportunity,” added Cook.

Earlier this month, Reliance Jio made its 4G services compatible for all Apple iPhones models, along with one year of free service.

The new offer coincided with the launch of new Apple phones in India — the iPhone 7 and the iPhone 7 Plus.