Consumers await 10th Anniversary launch of iPhone, hold back on new purchases

Apple’s 10th anniversary iPhone is expected to feature 3D facial recognition capability, wireless charging and a curved display.

In a surprising turn of events, Apple Inc has reported a fall in iPhone sales for its second quarter, which indicates that consumers are potentially holding back further purchases in anticipation of its 10th-anniversary edition which is schedule to be released later this year.

The company has come under increasing pressure to distribute its wealth. As a result, Apple boosted its capital return program by $50 billion and has increased its share repurchase authorization by $35 billion. It has also raised its quarterly dividend by 10.5%.

Investors however were unmoved by its move. Apple’s shares were down by 1.9% at $144.65 in after-hours trading.

Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1, which is down from 51.19 million a year earlier.

As per FactSet, a financial data and analytics firm, analysts had on average pegged iPhone sales at 52.27 million.

Luca Maestri, Apple’s CFO has argued saying the decline was not as bad as it looked given the peculiarities of how phone sales are calculated.

As per the company’s report, Apple measures its sales through “sell-in” figures, which are a measure of how many units it sells retailers, as opposed to “sell-through” figures, which are how many phones are actually sold to consumers.

Maestri stated that Apple has reduced the number of its phones going through its retail channels by about 1.2 million units in the quarter. It has sold 52 million phones to customers on a sell-through basis.

Despite a dip in the number of units sold, its revenues have risen by 1.2% in this quarter helped by a higher average selling price.

Consumer expectations are building ahead of the launch of its 10th-anniversary iPhone launch.

With Apple typically launches its new iPhones in September, the holiday season usually witnesses a big jump in sales. The demand gradually tapers down over the next quarters as consumers again await the next launch.

“There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter’s miss,” said James McQuivey, an analyst at Forrester Research. “If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn’t confident it will beat those expectations.”

According to Thomson Reuters I/B/E/S, the company had forecast a total revenue in the range of $43.5 billion to $45.5 billion for the current quarter, against analysts’ expectation of $45.60 billion.

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