iPhone Sales Drop for the First Time in 13 Years
Apple's 13-year streak of quarterly revenue growth ended Tuesday, April 26, when the tech giant reported that its quarterly sales had dropped for the first time in over a decade.
Apple, which has been the world's most valuable company for the last five years, reported that revenue for its second fiscal quarter, which ended on March 26, dropped 13 percent to $50.6 billion, lower than the $52 billion forecasted by analysts. The reported quarterly net income was $10.5 billion or $1.90 per diluted share, lower than the $2 per share forecast.
The drop in revenue was a result of flagging sales of the company's flagship product, the iPhone. In the first three months of 2016, the company sold 51.2 million iPhones, a number that barely passed the expected 51 million unit shipments and represented a significant drop from the 61 million iPhones shipped during the same period last year.
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During a conference call to Apple investors, CEO Tim Cook called the second fiscal quarter "busy and challenging" (via Forbes).
"I think that the market, as you know, is currently not growing," Cook said. "However, my view is that's an overhang of macroeconomic environment in many different places in the world. We are very optimistic that this too shall pass and that the market, and particularly us, shall grow again."
But while the Apple CEO and his team predicted the Apple sales slump back in January, he remains optimistic that the SE, the company's new entry-level smartphone, would boost sales among consumers switching from Android and those in emerging markets.
"The SE is attracting two types of customers, who want the latest tech in a more compact package, and there are more than we thought in that category," Cook told analysts (via USA Today). "And those who want an iPhone but couldn't afford the entry price [before]. We're excited where this can take us."
Cook also signalled that the company should be able to capture new consumers in markets such as India and China. Apple has now opened 35 stores in China and is expected to open five more in the next few months, Cook reported. Meanwhile, in India, the growing adoption of high-speed LTE should make the power and the capability of iPhones more attractive to more customers.
According to analysts, Apple's revenue should begin picking up by the fourth quarter, boosted by the expected release of a possible iPhone 7 in September.
