Apple Inc. (AAPL) Tumbles after Predicting First Sales Decline

“The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices”. Apple reported $75.9 billion in revenue and sold 74.5 million iPhones.

In the fiscal quarter Apple sold 74.8 million iPhones a record, but only fractionally higher than the 74.5 million in the same period past year and the slowest growth since the lifestyle-altering handsets were introduced in 2007.

In its earnings call this afternoon, Apple CEO Tim Cook said that 40% of iPhone users are on the iPhone 6, 6s, 6 Plus, or 6s Plus – the phones announced within the previous year and a half.

In addition to the iPhone, Apple’s other product lines are also disappointed. iPad sales continued to decline, falling to 16.1 million tablets during the holiday quarter, compared with a projection of 17.3 million.

Its net profits last quarter were $18.4bn (£12.8bn), up 2% on the same period in 2014. Apple is projecting revenue of $50 to $53 billion, which is down from the $58 billion the company made previous year.

Even if hardware sales continue to slow, devices already in the market will continue to generate revenue from services, Cook implied.

Apple late on Tuesday reported flat iPhone sales during the three months to 26 December, and warned that it expects shipments of its coveted smartphone to fall in the current quarter. But they also acknowledged the company is working to broaden its business beyond the iPhone itself, which in recent years has provided the bulk of Apple’s revenue. Wall Street analysts expected $76.5 billion in revenue and 75 million units sold for the quarter.

While revenue in Greater China rose 14% in the fourth quarter, Apple is beginning to see a shift in the economy, particularly in Hong Kong, Maestri told Reuters.

Two thirds of Apple’s revenue is now generated outside the U.S., Cook explained, “so foreign currency fluctuations have a very meaningful impact on our results”.

In other words, Apple is going to create a premium version of the premium iPhone.

“While near-term Apple is hitting some growth speed bumps we believe brighter days are ahead with iPhone 7 on the horizon”, he said.

“We don’t live in 90-day quarters, and we don’t invest in 90-day quarters”, said Cook.