Apple reports slowest growth in iPhone sales since it launched in 2007

“Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV”, said Tim Cook, Apple’s CEO. The company also admitted that it has started to feel the effects of the economic softness in its critical Chinese market as it warned that iPhone sales are set to fall.

One retail expert said Apple must come up with “revolutionary products” this year if it is to avoid further damage to its growth. Apple has been reluctant to pursue the lower ends of the market, McGregor noted.

In an earnings call in which the company reported meager iPhone growth and forecast its first revenue drop in 13 years, the Indian market stood out as a rare bright spot for Apple. Analysts surveyed by Thomson Reuters had forecast Apple to earn $3.23 a share on $76.5 billion in revenue. Apple reported sales of 74.8 million iPhones during the quarter – up less than 1 percent from the same time one year ago.

According to the figures, filed before Australia Day and obtained by Fairfax Media, Apple recorded higher sales, marketing and distribution expenses of $435 million and administrative expenses of $30.7 million.

“It’s disappointing to see them miss on an already downward adjusted sales number and the fact is that with their iPhone growth slowing what was needed was a product to be excited about”, said J.J. Kinahan, chief strategist at TD Ameritrade.

For the March quarter, Apple projected revenue of $50 billion to $53 billion, down from $55 billion a year ago.

In its financial report released Wednesday, Apple boasted it generated operating cash flow of US$27.5 billion (AU$39.1 billion) during the quarter, returning over US$9 billion (AU$12.8 billion) to investors through share repurchases and dividends.

That would be Apple’s first year-over-year sales decline since the January-March quarter of 2003 long before the company began selling iPhones and iPads.

“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.

For the last quarter, revenue in “Greater China” was up 14%, but weaker in the Americas, its biggest market, and Japan.

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

“Pretty great to be Apple”, he said in a tweet. Services accounted for $6 billion. As much as investors were concerned about what Apple will say about the past quarter, many are even more focused on the current quarter.