iPhone sales lag drags Apple revenue to first drop in 13 years

Waning sales of Apple's signature iPhone weighed on the company's second quarter results Tuesday, bringing the first year-on-year decline in revenue since 2003.

Apple sold 51.2 million iPhones in the second quarter, a decrease of 16 per cent year-on-year, and forecast similarly weak demand for the quarter to come.

The slowdown showed up on the bottom line: Revenue was down 13 per cent to 50.56 billion dollars, the company's first quarterly drop since 2003.

Apple's profits from the quarter ending in March sank by more than a fifth compared to the same quarter a year before, to 10.5 billion dollars.

The results missed the expectations of analysts, who had anticipated a smaller drop in sales, and forecasts for the coming quarter, which ends in June, brought investors no relief.

Apple projected third-quarter revenue between 41 billion and 43 billion dollars - well short of analysts' estimate of 47.4 billion, Bloomberg News reported.

There was no help in sight from Apple's other gadgets. Sales of iPad tablets fell by nearly a fifth in the second quarter, while Mac sales declined 12 per cent, Apple said. The decline in Mac sales is more than the 10 per cent decline in the PC market overall.

Since its launch in 2007, the iPhone has been key to Apple's earnings, representing two-thirds of the consumer technology giant's overall sales.

Chief executive Tim Cook said the company had done well in the face of "strong macroeconomic headwinds."

Apple said economic slowdowns had decreased demand, particularly in China, its second-biggest market after the United States.

But demand for iPhones and other high-end smartphones worldwide has declined as the market has become more and more saturated.

In the developing world, where demand for mobile devices is on the rise, Apple's high-end prices are an obstacle to breaking out of the luxury niche.

Apple's strategy had been to resist lowering its prices, preserving billion-dollar profits at the cost of market share.

In March, however, the company introduced its lowest-priced iPhone ever, the iPhone SE, offering most of the gadget's top-end features at a significantly reduced price in hopes to lure more buyers in China and India. The iPhone SE went on sale March 31.

Last update: Tue, 28/06/2016 - 17:25
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