Apple Sales Take a Dive in Fourth Quarter


Apple Inc reported another decline in sales during its fiscal fourth quarter, hurt by the lackluster results from iPhone 6S, Macs and iPad sales.

The American tech company said revenue in the quarter slumped to $46.9 billion, down about 9 percent from a year earlier. The figure was virtually in line with expectations of analysts polled by Thomson Reuters.

It was the third quarter in a row that Apple has reported a decline in revenue, year-on-year. The Wall Street Journal reports that it was the first full-year top and bottom lines slide since 2001.

For the third quarter, Apple had reported $42.4 billion in revenue, down from $49.61 billion a year earlier. Revenue for the second quarter was $50.56 billion, sliding from $58.01 billion during comparable period a year earlier.

Earnings also declined for the third consecutive quarter, although they slightly exceeded expectations. The iPhone maker posted profit of $9 billion, or $1.67 per share, down 19 percent from $11.1 billion, or $1.96 a share, a year ago. In spite of the slump, earnings managed to exceed a Thomson Reuter analyst consensus estimate of $1.66 a share.

Apple, which has risen over the past years to become one of the world’s most valuable, wraps up a rather disappointing fiscal year, during which it had to endure subdued sales of its iPhone 6S. It has been especially hurt by slowing growth in its current biggest market, China.

Sales in greater China, including Hong Kong and Taiwan, slumped 30 percent to $8.8 billion in the fourth quarter. Sales to the region had jumped 99 percent during comparable period a year ago.

The tech giant said it sold expectation-beating 45.5 million units of the iPhone during the quarter. Analysts had expected shipped units to come in at around 44.8 million. However, the sales figure was about 2.5 million less than the level reported in the same period a year ago.

The iPhone still accounted for 63 percent of Apple revenue during the fiscal year despite the slump in sales. And the company is optimistic of better performance in the new fiscal year as a result of increased demand for the latest iPhone 7.

“We couldn’t be more excited about the customer response to the iPhone 7 and the iPhone 7 Plus,” Chief Executive Officer Tim Cook said.

The iPhone 7, which went on sale just a week before the end of the fiscal fourth quarter, is enjoying strong demand at the moment – way beyond what Apple appear to had expected. Cook said consumer response to the latest iPhone “has really been off the charts,” with waits especially for the company’s biggest smartphone iPhone 7 Plus.

An independent analyst, Neil Cybart, said consumers are on an eight-week wait for some iPhone 7 models, according to the Wall Street Journal.

The sales of iPhone 7 has also benefitted immensely from massive recall of rival Samsung Galaxy Note 7 due to safety concerns.

Apple iPad sales were flat during the quarter, while sales of Mac computers dipped 17 percent from a year ago. Sales of “other products” declined 22 percent. However, revenue from Apple Music climbed 22 percent.

Payday Loans Provide a ‘Necessary Service for Cash-strapped Consumers

Empty wallet

Payday loans are quickly becoming a hot topic all over Canada.

Earlier this week, it was reported that a growing number of Canadian consumers are turning to payday loans. According to the Financial Consumer Agency of Canada (FCAC), a federal consumer watchdog agency, four percent of Canadian households have taken out a payday loan in the past 12 months.

The FCAC also found that many payday loan customers are unaware of the specifics and details, and were unaware that cash advances on credit cards are cheaper than payday loans.

“High household indebtedness and low levels of consumer savings, particularly the absence of a household emergency fund, make a payday loan a solution for many consumers despite their very high cost,” said Jane Rooney
, financial literacy leader at the consumer agency, in a statement.

Despite the negative publicity that the payday loan industry has gotten, a new report suggests that these alternative financial products provide a “necessary service for cash-strapped Canadians.”

The Conference Board of Canada published the results of a new research report that took a look inside the payday loan industry. Officials concluded that short-term, businesses offering high-interest online payday loans provide an array of benefits for Canadians who do not have access to traditional banking options and forms of credit.

Entitled “Filling the Gap – Canada’s Payday Lenders,” researchers did note that provincial and municipal rules and regulations do establish “safeguards” to shield households and consumers from unscrupulous payday lenders. The legislation that is currently in place prevents exploitation from transpiring.

However, even more regulation is not required. Instead, consumer education is a better approach to take rather than piling on more rules that puts the most vulnerable at a greater disadvantage.

“A public policy approach favoring consumer education is advised,” the Conference Board of Canada wrote in its report. “Distinguishing licensed online payday loan lenders from illegal lenders would be a critical step towards protecting the financial welfare of Canadian payday loan borrowers, and deterring the growth in unscrupulous, unregulated channels.”
In addition, the report alluded to the industry’s positive impact on the national economy.

The Conference Board of Canada employs nearly 7,000 full-time jobs and offers total salaries of close to $300 million. Therefore, over-regulating licensed payday lenders would harm Canadians and workers.

In 2014, the licensed payday loan industry in Canada extended approximately 4.5 million short-term loans to Canadian households. This represents a total value of $2.2 billion. Are these borrowers entering into endless debt cycles? Not quite. Eighty percent of payday loan users, the report notes, borrow a maximum of two times per year.

Tony Irwin, president of the Canadian Payday Loan Association, is pleased with the findings in the report, arguing that payday loans are a vital tool for Canadians across the country.
“The Canadian Consumer Finance Association agrees with the Conference Board of Canada that a focus should be to increase financial literacy among Canadians, and our member companies continue their efforts in this consumer education,” he said in a news release.

In multiple provinces and municipalities, officials are trying to rein in the industry by reforming what they charge, how they charge and where they can operate.

Rockwell Collins Takes Over B/E Aerospace in $6.4 Billion Deal

Rockwell Collins

Aircraft component supplier Rockwell Collins has agreed to buy aircraft interior company B/E Aerospace Inc. for $6.4 billion in a deal that represents a big bet on smarter airplanes featuring onboard connectivity for seats to lavatories and miscellaneous cabin systems.

The deal, which will be the biggest in the 83-year history of Rockwell Collins, was announced by it alongside B/E Aerospace on Sunday. It marks a continuation of recent consolidations in the aerospace industry, in part, to save costs and improve profitability.

Rockwell Collins agreed to pay $62 per share in cash and stock, which represents a premium of 22.5 percent on the closing price of B/E Aerospace shares on Friday. The shares had closed at $50.61. Investors of the aircraft interior maker will receive $34.10 in cash and $27.90 in shares.

With this deal, the Boeing supplier will be getting the biggest aircraft cabin equipment supplier. It gives the company more innovative ways for deployment of high-spread broadband connectivity on aircraft.

Chief Executive Officer Kelly Ortberg, who was named into the position less than two weeks ago, said in an interview on Sunday that the merger will facilitate substantial reduction in costs. It also gives the companies the ability to cross-sell products to each other’s customers and makes the resulting single company a potential leader in the development of smarter airplanes.

“It sets us up for the future,” Ortberg said. “We’ve made major investments in next-generation airplanes. That trend is going to translate into the interiors of aircraft.”

Companies in the aerospace industry are spending more and more on connecting passenger facilities and aircraft system with the Internet via the satellite. An increasing number of commercial airplanes now provide passengers with high-speed broadband access to enable them stream their preferred content, among other uses.

B/E Aerospace ranks among the world’s biggest manufacturers of aircraft seat, galleys and other interior fittings. The Wellington, Florida-based company has claimed about half of the coach seat market. It is even more dominant in the market for luxury business-class seats, each of which can cost an amount in excess of $100,000.

With this proposed acquisition, Rockwell Collins will be able to expand significantly on a portfolio that has mainly focused on communications and computing equipment for aircraft. Ortberg said the merger would triple the value of the Cedar Rapids, Iowa-based aircraft component maker’s supplies for an average widebody jet and double the value of supplies for a narrowbody.

A drop in widebody jet orders and sluggish trend in the business jet market are two of the challenges currently confronting companies such as Rockwell Collins and B/E Aerospace. Ortberg is however optimistic of improvement over the coming years, noting upgrades would soon be needed for many older widebody aircraft.

Rockwell Collins’ stock price is down about 8.5 percent this year, but that of B/E Aerospace is up by nearly 20 percent. The earnings of the Boeing supplier rose 13 percent in the last quarter, while that of its new acquisition jumped 82 percent in the quarter from a year ago, according to results reported on Sunday.

The deal still has to be approved by shareholders and regulators. It is scheduled to close early next year.

Microsoft to Raise Prices in UK on Slumping Pound


The prices of some Microsoft enterprise products and services in the U.K. are to rise from the beginning of next year as a result of the continuing decline in the value of the pound, the tech giant has announced.

Microsoft said it would increase the prices of its products and services by as much as 22 percent, starting from January 1, 2017.

The Redmond, Washington-based company revealed in a recent post on its blog that the prices of its business software will increase by 13 percent. Cost of its online cloud services will witness a 22 percent jump.

These increases, which are considered among the consequences of the Brexit vote, are set to impact adversely on thousands of businesses. They also have the potential to cost governments in the U.K. several millions of pounds.

These changes were in line with Microsoft’s policy of assessing local pricing periodically to reflect prevailing situations. The company said the price hikes were needed to ensure that prices in the U.K. are in harmony with those across the region.

Not every piece of consumer software or cloud services offered by Microsoft will directly be affected by the price increase. But all products and services are likely to be affected considering resellers are free to set their own prices.

The increases will be applicable to new purchases. Some customers with existing contracts will be able to enjoy protection from the price hike.

“Customers with Enterprise Agreements have price protection on previously ordered enterprise software and cloud services and will not experience a price change during the term of their agreement,” Microsoft said.

The multinational technology company is a leading business software seller in the U.K., where its office suite of programs such as Word, Excel and PowerPoint is quite popular. Its Azure cloud service is also well accepted there by end users, including the Ministry of Defence.

The announced price hike is expected to counter, to an extent, efforts by the U.K. government to reduce spending on IT products and services. It could hinder the attainment of the goal of cutting down civil service costs significantly.

The Cabinet Office has not disclosed the amount it spends on Microsoft products and services. However, the amount is thought to be about £100 million per year at the minimum, according to the Telegraph.

It is not yet clear what steps the U.K. government would take after invoking Article 50 of the European Union Treaty that will set off the process of the country’s official exit from the regional bloc.

Several multinational companies have moved to lessen the impact of resulting slump in the sterling by raising prices.

Unilever and UK retailer Tesco were recently involved in a “Marmitegate” stand-off that arose from the consumer goods giant’s request for a price increase. Paul Bulcke, chief executive officer of Nestle, stated last week that the company was considering available options, including price hike, to deal with the problem constituted by the slump in the UK currency.

Another American tech giant, Apple, had increased its hardware prices in the country last month, citing decline in the value of sterling.

The price hikes will mainly affect consumers and businesses in the U.K. given resellers have a way of shifting the burden of cost increases.