Apple on Tuesday reported its first-ever drop in iPhone sales since launching the smartphone in 2007 as the tech giant's long streak of rising revenue ended.
Apple said iPhone sales dropped year-over-year for the first time, slipping to 51.19 million units in the recently ended quarter compared with 61.17 million in the same period a year ago.
Profits fell as well: Apple reported net income of $10.5 billion in the fiscal quarter to March 26 from $13.6 billion last year.
With iPhones the main driver of sales for the company, revenue fell on a year-to-year basis for the first time since 2003: $50.6 billion from $58 billion a year earlier.
Apple shares dove more than eight percent to $95.90 in after-market trades that followed release of the earnings figures.
Sales of iPhones, the heart of Apple's mobile age money-making machine, were down 16 percent, according to the earnings report.
Apple chief executive Tim Cook said of the slump that "this too shall pass."
Analysts said it was not surprising to see the drop given the saturation of the global smartphone market.
"Following a rapid expansion into new markets over the years from 2007-2011, Apple was approaching saturation of the available distribution channels, and many of those already in the smartphone market who could afford to buy an iPhone had one or one of its high-end Android competitors," said Jan Dawson at Jackdaw Research.
Dawson said Apple managed to boost sales in a slow-growing market with its large-screen models, but that it is unclear if it can regain momentum.
- Boosting share buy-back -
Apple also announced that its board has authorized $35 billion more to be spent on buying back shares, along with money for the dividend to be increased to 57 cents per share.
Apple has been making inroads into wearable technology with its Apple Watch and moving into services such as music subscriptions, but remains largely dependent on the iPhone for profit and revenue.
"While Wall Street was disappointed with Apple missing core revenue and earnings numbers, we aren't talking about a company in trouble," said Patrick Moorhead, president and principal analyst at Moor Insights and Strategy.
"Apple is still driving iPhone market share in nearly every region, and we will shortly know if the iPhone SE enables continued market share gains in the mid-range."
The analyst noted that Apple rivals Samsung, LG, HTC and Huawei have "dramatically amped up their smartphone games" and the effect of that should be seen in the current quarter.
Apple last month went small, cutting prices as well as screen size with the introduction of a new iPhone and iPad aimed at first-time buyers and customers in emerging markets.
- Eye on India -
A new iPhone SE recently debuted at $399 for US customers without a contract subsidy, a significant cut from the price of Apple's larger iPhones.
The iPhone SE did not launch in time for sales to be included in the quarterly earnings, but Apple executives said demand has outpaced supply.
The new iPhone model was seen as having strong potential in international markets beyond China, particularly in India.
Even though the price tag is higher than low-cost Android handsets that dominate the market, it puts the cherished Apple brand within better reach to consumers in developing economies.
Revenue from Apple sales in China were down 26 percent to $12.5 billion in a year-over-year comparison for the quarter, but up 56 percent in India.
"China is not weak," Cook said during an earnings call.
"We may not have the wind at our backs that we want, but it is a lot more stable than what I think is the common view of it."
Cook noted that the bulk of the revenue drop for Apple in Greater China was in Hong Kong, where currency linked to the strong US dollar crimped sales while the company fared better on the mainland.
Cook saw tremendous potential for Apple in India, where he expected iPhone sales to accelerate with broader rollout of high-speed telecommunications networks.
"I think there is great opportunity there," Cook said of India.
While Apple is the world's largest company by profit and market value, it has been shifting its focus in anticipation of the slowdown.
Apple spotlighted the profit it brings in from services such as Apple Music, iTunes, Apple Pay and the App Store, saying revenue shot up to a new quarterly record high of nearly $10 billion.
"We have developed a very large and profitable business in the services area," Cook said.
There are more than a billion Apple devices being used around the world, providing a large pool of potential customers for digital content or services offered in the company's "ecosystem."
AFP
Wed Apr 27 2016
Apple said iPhone sales dropped year-over-year for the first time, slipping to 51.19 million units in the recently ended quarter compared with 61.17 million in the same period a year ago. - Filepic
Former special forces commander Prabowo to take up Indonesian presidency
Indonesia's Prabowo Subianto will take over as president of the world's third-largest democracy after sweeping the country's election with policies like free meals for school children
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Trump says he would impose tariffs on China if China went into Taiwan
Republican presidential candidate Donald Trump said he would impose additional tariffs on China if China were to "go into Taiwan,"
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.