Apple bracing for first sales decline in 13 years, despite iPhone record

SAN FRANCISCO -- Apple is bracing for its first sales decline in 13 years, despite selling a record 74.8 million iPhones in the final three months of 2015.

See Full Article

The giant tech company says revenue could fall at least 8.6 per cent during the January-March quarter, compared with a year earlier. Analysts say the latest iPhone models are selling reasonably well, but they're not providing the boost Apple needs to match the massive sales growth it enjoyed last year.

The company inched past its previous record, established when it sold 74.5 million iPhones in the holiday quarter of 2014. But Tuesday's forecast implies Apple doesn't expect to match the 61 million iPhones sold in last year's January-March quarter.

Apple's stock has been in a slump for months, as investors worry that the company won't be able to duplicate last year's growth in sales, which were in the double-digit percentages. In an interview, Chief Financial Officer Luca Maestri said a strong dollar helped reduce revenue, as sales made with foreign currencies abroad convert into fewer dollars. He also said the company isn't concerned about what he characterized as a short-term slowing of growth, because it has a large base of customers who can be relied on to buy new devices and pay for other services.

"We think we're in the strongest position we've ever been," Maestri told The Associated Press, adding that the company estimates 1 billion Apple devices -- including iPhones, iPads, Apple Watches and Mac computers -- are now in active use.

The iPhone, however, is Apple's biggest-selling product, contributing nearly two-thirds of its revenue and a similar share of profit. Despite the introduction of new models, analysts say global demand for new smartphones isn't growing as fast as it has in recent years. Apple is also confronting an economic downturn in China, one of its biggest markets.

The giant tech company is in no financial danger. It earned $18.4 billion in profit for the October-December quarter, up 1.8 per cent from a year earlier. It had $75.9 billion in revenue, an increase of 1.7 per cent. Earnings amounted to $3.28 a share, which beat the $3.23 average forecast among analysts surveyed by FactSet. Revenue fell short of analysts' estimates, which averaged $76.7 billion.

No one expects Apple to match those results in the current, January-March quarter, as sales traditionally drop after the holiday shopping season and the introduction of new models. But Apple's forecast, which calls for revenue between $50 billion and $53 billion in the current period, means the company will likely fall short of the $58 billion it had a year earlier.

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. Back then, Apple was a fraction of its current size, reporting quarterly revenue of just $1.45 billion.

While the iPhone has been a phenomenal success, analysts say it's difficult to match the sales surge that Apple enjoyed last year, after it introduced the first iPhone models with significantly larger screens to compete with big-screen phones from rivals like Samsung, which were hugely popular in Asia.

Analysts say last September's release of two more big-screen phones, the iPhone 6S and 6S Plus, made less of a splash because they were viewed as relatively similar to the previous models, despite some new features. Analysts say the slight increase in sales for the December quarter came in part because Apple began selling the newest models several days earlier in key markets such as China.

Apple is expected to release the next iPhone models, with new features, later this year. That could fuel another surge in sales. Along with first-time buyers and people who switch from competitors' phones, analysts say Apple can count on a loyal base of iPhone owners who will buy a new model every two years or so.

Skeptics, however, note that Apple hasn't come up with a blockbuster product to replace the iPhone. The company's latest report showed sales of Mac computers and iPads both declined in the previous quarter.

Apple has introduced new gadgets like a larger iPad for business users and the Apple Watch, along with new online services like Apple Pay, Apple Music and other apps. In a report this week, analyst Colin Gillis of BGC Financial warned that "the big issue for Apple" is whether the company can garner significant amounts of revenue from those new products.



Advertisements

Latest Tech & Science News

  • Climate change scientists fight for funding to save High Arctic lab

    Tech & Science CBC News
    Some of Canada's leading climate change scientists are fighting to keep the country's northernmost research station in operation. The Polar Environment Atmospheric Research Laboratory (PEARL) in Eureka, Nunavut, tracks atmospheric data that no other research station can, given its High Arctic latitude, only 1,110 kilometres from the North Pole. Source
  • Right whale skeleton, DNA headed to Canada's largest museum

    Tech & Science CBC News
    Scientists at the Royal Ontario Museum in Toronto are hoping that some good can come from three dead North Atlantic right whales, towed to a beach on P.E.I. this summer. Final report on right whale deaths still weeks away, say AVC pathologistsRight whale necropsy underway on P.E.I. Source
  • Asteroid mining could support space economies, colonies

    Tech & Science CBC News
    A team of researchers are planning to send robotic spacecraft into outer space, land near asteroids hurtling through the abyss and mine them for water, metals and other elements that will make colonizing space that much easier. Source
  • Algae on river flowing into Lake Erie prompts warning

    Tech & Science CTV News
    TOLEDO, Ohio -- Health officials in Ohio are telling children, pregnant women and people with certain medical conditions not to swim in the river that flows through Toledo because of an algae outbreak. The Maumee River along the city's downtown waterfront has turned unsightly shades of green the past few days, leading local health officials to issue a recreational advisory Thursday. Source
  • #BugsR4Girls: How 8-year-old Sophia Spencer co-authored a scientific paper on bugs

    Tech & Science CBC News
    Sophia Spencer hated it when classmates taunted her for her love of insects, but seeing them kill her pet grasshoppers for fun was even worse. Her first-grade peers couldn't understand what she found so fascinating about bugs of all sorts or why she'd devoted spare time to catching them, reading about them and generally carrying on like a budding entomologist. Source
  • Tech firms and lawmakers celebrate new trans-Atlantic cable

    Tech & Science CTV News
    WILLIAMSBURG, Va. -- Lawmakers and tech industry leaders have announced the completion of a new high-speed data cable that stretches across the Atlantic Ocean. Representatives from Facebook and Microsoft joined with Virginia's governor and two senators in Williamsburg to celebrate the cable's completion on Friday morning. Source
  • Ont. girl who was teased for love of bugs gets name in science journal

    Tech & Science CTV News
    Sophia Spencer hated it when classmates taunted her for her love of insects, but seeing them kill her pet grasshoppers for fun was even worse. Her first-grade peers couldn't understand what she found so fascinating about bugs of all sorts or why she'd devote spare time to catching them, reading about them, and generally carrying on like a budding entomologist. Source
  • Help from above: Canadian satellite assists with hurricane recovery, other natural disasters

    Tech & Science CBC News
    When Hurricane Irma cut a path of destruction through the Caribbean this month, authorities on the ground found themselves in the dark, scrambling for information. High above the storm, satellites from several nations, including Canada, were called into action to track the hurricane's progress, measure the damage and provide vital information to plan rescue and recovery efforts. Source
  • Indonesia raises Bali volcano alert to highest level

    Tech & Science CTV News
    JAKARTA, Indonesia -- Indonesian authorities have raised the alert level for the Mount Agung volcano on the tourist island of Bali to the highest level, and more than 11,000 villagers have left their homes around the mountain, officials said Friday. Source
  • Plenty of rain and thriving plants made it a 'crazy great summer' for monarchs and other insects

    Tech & Science CBC News
    One of Canada's most cherished species seems to be making a comeback in Toronto gardens — at least for a few more days. Monarch butterfly watchers in Canada and in the United States say it's been a good year for the iconic orange-and-black pollinators, who leave for winter habitats in Mexico from Canada and the U.S. Source