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End of a Technological Era? Apple Warns of iPhone Sales Fall

Jan. 27, 2016
Apple posted record quarterly profit despite the iPhone faltering and remains optimistic about the overall smartphone market.

SAN FRANCISCO - Apple (IW 500/3) raised the specter of the end of a technological era after reporting Tuesday the slowest growth sales ever of its market-leading, life-changing iPhone and warning it expects worse to come.

The California technology colossus said it expects to see its first decline in iPhone sales in the current quarter, when it will be compared to three months of blockbuster sales in the same period last year.

"We do think that iPhone units will decline in the quarter," Apple chief executive Tim Cook said during an earnings call with analysts.

But Apple, which Tuesday posted record quarterly profit despite the iPhone faltering for the first time since it was launched, remains optimistic about the overall smartphone market.

Apple plans to continue investing in smartphones despite economic woes dragging on many countries, and a strong U.S. dollar eating into its revenue, according to Cook.

"There are still a lot of people in the world who will buy smartphones, and we ought to be able to win over our fair share of those," Cook said.

A Billion Apple Gadgets

Net income for the quarter ending Dec. 26 was 2% higher than the same period a year earlier at $18.4 billion, while revenue of $75.9 billion set another record for the company, also edging up 2%.

The results were largely in line with expectations that sales of iPhones -- the driver of two-thirds of Apple revenue -- had peaked and that the company would need to find new sources of growth.

Apple shares have slid 20% since last year on these concerns.

"This is not Steve Jobs's Apple, which had hit after hit," said independent technology industry analyst Rob Enderle.

"They are going to have to figure out something else, and you hope it something other than a car because that is going to take a while."

Apple has declined to comment on reports that it has a secret automotive team working on an electric car.

Apple's Ecosystem

Apple said that it expected revenue in the current quarter to be between $50 billion and $53 billion. That would probably mean a decline from the $58 billion in the same period of 2015.

Apple has been diversifying with new offerings in music and is counting on growth from its Apple Watch and accessories.

The company reported sales of "other products" -- including the smartwatch and Beats music products -- was $4.35 billion in the past quarter, but did not break down those figures. Services accounted for $6 billion.

Sales of iPads saw a 56% drop in revenues and 25% dip in unit sales as the market for tablet computers cooled.

Avi Greengart at the research firm Current Analysis said things did not appear that bad for the world's biggest company by market value.

"Pretty great to be Apple," he said in a tweet. "Your main product [iPhone] is flat, most recent hit [iPad] is down 25%, R&D expenses up, yet profits rise."

By Glenn Chapman

Copyright Agence France-Presse, 2016

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