Apple $215.6 Billion Annual Revenue Report Marks First Drop Since 2001

Sales of iPhones in Q4 fell to 45.5 million from 48 million in 2015, but are up from Q3 when only 40.4 million iPhones were sold.

iPhones, Apple, revenue, net income, Q4 2016, earnings, iPads, Macs, Tim Cook

Apple's fourth-quarter revenue and net income fell compared to the same period one year ago, but are up from the third quarter of this year as the company continues to navigate more competitive and unpredictable global market conditions than it has seen in some time.

For the full year of 2016, Apple reported revenue of $215.6 billion and net income of $45.7 billion, lower than the $233.7 billion in revenue and $53.4 billion in net income posted for 2015. This is the first full-year revenue decline that Apple has recorded since 2001, the year the company introduced the iPod media player and six years before it introduced the iPhone.

For the fourth-quarter ending Sept. 24, Apple brought in $46.9 billion in revenue and $9 billion in net income, down from the $51.5 billion and $11.1 billion in the same quarter one year ago. The fourth-quarter figures, announced on Oct. 25 after the close of the stock market, rose compared to the third quarter, when $42.36 billion in revenue and $7.8 billion in net income were reported.

Earnings per share in the latest quarter were $1.68, compared with $1.97 a year earlier.

U.S. sales revenue came in at $20.2 billion, down from a year ago when Apple posted $21.8 billion in U.S. sales. The fourth-quarter revenue was up from the third quarter when the company brought in $17.9 billion in the U.S. Sales in the all-important China market totaled $8.8 billion in the fourth quarter, down 30 percent from a year ago, when the company brought in $12.5 billion in revenue in China. The fourth-quarter revenue figure in China was also down about 1 percent from the $8.8 billion in revenue there in the third quarter, according to Apple.

Global iPhone sales in the fourth quarter fell to 45.5 million handsets and revenue of $28.2 billion, compared with iPhone sales of 48 million and revenue of $32.2 billion from the handsets in the same quarter a year ago. Sales of iPad tablets fell to 9.3 million units and revenue of $4.3 billion in the fourth quarter, from 9.9 million devices and $4.9 billion in revenue a year earlier. Mac computer sales fell to 4.9 million units and $5.7 billion in revenue in the fourth quarter, from 5.7 million units and $6.9 billion in revenue during the same period in 2015.

Patrick Moorhead, principal analyst, Moor Insights & Strategy, told eWEEK that those figures had to be disappointing for the iPhone maker.

"Apple didn't have a great Q4 as iPhones, Macs, China, and what appears to be [Apple] Watch and even [sales in] the U.S. were down," said Moorhead. "I'm suspecting there may have been availability issues on the iPhone 7 as Apple guided higher than expected."

Despite the year-to-year revenue and net income drops, Apple officials said they were pleased with the company's performance.

"Our strong September quarter results cap a very successful fiscal 2016 for Apple," Tim Cook, Apple's CEO, said in a statement. "We're thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our services business, where revenue grew 24 percent to set another all-time record."

Luca Maestri, Apple's chief financial officer, said in a statement that the company generated $16.1 billion in operating cash flow, which was a new record for the September quarter. "We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program," he said.

Several other IT analysts also told eWEEK that Apple's latest earnings report continues to show weakness for the company.

Sales of iPhones are up quarter-over-quarter by 17 percent but are down year-over-year by 5 percent, said Jack Gold, principal analyst with J. Gold Associates. "That shows that the new [iPhone 7] models are having some positive effects, but it's still problematic that they are down year-over-year, which is a better comparison of their strength in the market."

Gold said that it is hard to say whether Apple was helped by Samsung's recent battery fire and recall problems with its flagship Note7 smartphones, but added that he expects few Note7 fans will be switching to iPhones.

On the Mac side, Gold said he sees sales as week today but expects them to pick up during the holiday season. "And since Apple is rumored to be refreshing the Macs, that should help them, although it's still a pretty difficult market for PCs in general—Macs included," he said.