Did Rumors of a New iPhone Release Hurt Apple’s Q2 Sales?

Apple Inc. (AAPL) released its second-quarter earnings report on Tuesday, disappointing investors who were lookig for a turnaround in iPhone sales. But on Tuesday’s earnings call, CEO Tim Cook blamed rumors of a new iPhone release on the poor sales in the first three months of the year.

Loyalists are waiting to buy the new iPhone 7 in anticipation of a better upgrade.

With the iPhone’s 10th anniversary quickly approaching, fans of the device are expecting an exciting release from Apple, which traditionally announces a new phone and new version of the iPhone in September.

But is anticipation of a better upgrade holding iPhone lovers back from buying the iPhone 7, or is the company losing its innovative touch?

Last year, iPhone sales declined for three straight quarters. Sales spiked in the holiday quarter just after the iPhone 7 was released. Some analysts believe the release of the next iPhone will trigger a “super buying cycle.” Still, investors are scrutinizing any softness in iPhone sales.

Despite a decline in sales of its flagship phone, Apple had a strong second quarter. The company posted $52.9 billion in revenue and earnings per share of $2.10. In the same period last year, Apple reported $50.6 billion in revenue and $1.90 in earnings per share.

The majority of sales in the second quarter (65%) came from international markets.

In the earnings press release, CEO Tim Cook said the company was pleased with its performance in the second quarter.

“We’ve seen great customer response to both models of the new iPhone 7 Special Edition,” Cook said.

But Cook also blamed the media at least partly for the decline in sales.

“In general, what we are seeing, we’re seeing what we believe to be a pause in purchases on iPhone, which we believe are due to the earlier and much more frequent reports about future iPhones,” Cook said.

In the second quarter of 2017, Apple sold 50.76 million iPhones, a little less than the 51.19 million phones sold in the same period a year ago. With revenue and sales being in close ranges of each other for Q2 2016 and 2017, rumors may be not be causing the sales decline. It may just be business as usual for Apple.

But investors hold Apple to a high standard and closely scrutinize the iPhone maker’s performance. The company’s 50 million iPhone sales is sizable, but pales in comparison to the 78 million phones sold the previous quarter.

Apple typically sells fewer iPhones in the second quarter, but that doesn’t mean that its flagship phone isn’t in trouble. Cook may blame the media for fueling rumors, but a lack of innovation in new iPhone releases may be the real problem.

In 2014, when Apple last redesigned the chassis with the iPhone 6 and 6S, it sold 74 million units in the first quarter and 61 million units in the second quarter.

The iPhone 7 may have a new number, but it isn’t a complete redesign. The iPhone 7 Plus has an advanced camera and the company ditched the headphone jack.

But rumors of major upgrades like 3-D sensing and wireless charging may be keeping iPhone fans waiting until the new release to upgrade. And knowing that the iPhone 8 will be the tenth anniversary edition, fans may be expecting something big.

iPhone users may also be growing tired of plunking down hundreds of dollars on a device that will be replaced by a better model in just a few months.

There’s no shortage of iPhone 8 rumors on the web, but industry insiders speculate that the iPhone 8 won’t be released until early 2018.

 

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