April 26, 2016 Last Updated 4:24 pm

Apple posts first revenue decline in over a decade, iPhone sales down 16%, iPad sales down 19%

Total sales revenue fell 13 percent from the prior year, with sales revenue from the Americas, China and Europe all falling, only in Japan was there any good news

The streak is over. Apple posted its first decline in quarterly revenue since 2003, a run of success that one supposes is unprecedented in American business history. The culprit, of course, was iPhone sales that declined as expected.

iPhone sales came in at 51.2 million, which actually beat forecast, but couldn’t quite match the same quarter the year before. iPad sales also beat forecast, coming in at 10.2 million. But that was still down big over the same quarter last year when sales were 12.6 million, which itself was a decline in sales. This makes the ninth quarter in a row of declining iPad sales.


“Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

From a revenue perspective, the quarter was worse than expected. Revenue came in at $50.6 billion versus $58.01 billion last year, below the expectations of $52 billion. Net quarterly profit was $10.5 billion, compared to $13.6 billion in the same quarter last year.

What will make investors particularly worried won’t be iPad sales, of course, but sales in China – which tanked, falling 26 percent in the comparison quarter. Oddly, Japan was the bright spot, with revenue rising 24 percent.

But all in all, this was the kind of quarter that those who like to short the stock having been looking for. It was, in short, ugly.


Not surprisingly, investors are going after the stock in after hours trading, taking Apple shares down over 5 percent. Also not surprisingly, Apple announced that the Board had approved an increase of 10 percent to the Company’s quarterly dividend, in an overly obvious stock price saving move. Unlike Steve Jobs, Tim Cook has proved far more sensitive to the concerns of shareholders than those of Apple customers (who continue to complain about Apple’s stingy storage policy on iOS devices).

Things could get worse. Chinese regulators recently shuttered Apple’s iTunes and iBooks businesses in China. Apple hoped that growth in these areas in China could make up for slowing business elsewhere. But content sales are not the same as hardware sales, and unless they can be tightly controlled (read: censored) there may be no way Apple can turn back on that faucet.

Meanwhile, the summer will mean that anticipation will build for the iPhone 7, which will be expected to provide a major boost to unit sales. But that also may prove difficult as the way phones are being sold – less two year subsidized sales and more straight purchases – means owners may choose to hang on to their iPhones longer than they have in the past.

Besides Japan, was there anything Apple could hang its hat on? Yes, services recorded a good quarter.

“March quarter services revenue was our highest ever,” CEO Tim Cook said during the conference call. Services revenue increased 20 percent to $6 billion, and Apple said that its streaming service, Apple Music, now has 13 million paying subscribers.

Oh, and the company is still making a boat load of profits, let’s not forget that. Then there is the $233 billion Apple still has in the bank (offset by its $77 billion in long term debt). So, no, the sky is not falling. Not yet, anyways.

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