Apple’s most recent earnings report is increasing concerns that the world has finally reached a saturation point with smartphones. In the latest quarter of its fiscal year, Apple reported its first-ever drop in iPhone sales. Quarterly unit shipments declined 16 percent to 51.2 million in the three months ended in March, down from the 61.1 million units shipped in the same quarter of last year. However, the amount met analysts’ expectations of 51 million units shipped.
Apple makes more than two-thirds of its revenue from the iPhone, and the sales slump was reflected in its earnings report. Total revenue for the company dropped to $50.6 billion, down from about $58 billion during the same period last year. It was its first year-over-year decline since 2003, a run of 51 quarters. Profit fell 18 percent from the same period a year ago. The company reported adjusted quarterly earnings of $1.90 a share, well below the $2 a share expected by analysts.
Sales of Apple’s other products aren’t doing much better than its iPhone sales. Sales of the iPad dropped 18 percent to 10.3 million units, while the Mac saw sales drop nearly 12 percent to 4 million units. Apple doesn’t release numbers on its year-old Apple Watch, so it is difficult to determine how well that product performed.
The sales slump extended to nearly every region that the company operates in. Sales fell 10 percent to $19 billion in the Americas, while sales in Europe fell 5 percent to $11.5 billion. The company saw a 25 percent drop to $3.2 billion in the Asia Pacific region, and revenue in Greater China declined 26 percent to $12.5 billion. Sales only grew in Japan, the company’s second-smallest market.
Investors were not happy with the results reported by Apple. Apple shares dropped more than 6 percent in late trading. Prior to the after-hours selloff, Apple had a market value of $579 billion, higher than any other company in the S&P 500. To appease investors, Apple’s board increased its quarterly dividend by 10 percent to 57 cents per share and announced a plan to increase its share buyback program by 25 percent to $175 billion.
Tim Cook, Apple’s CEO, said the company is struggling to keep up its historically massive growth. After losing 80 percent of its stock value between 1991 and 1997, the company has grown nearly 21,000 percent in the following two decades. Much of that success has been due to the company’s record-setting iPhone sales. While Apple has launched new gadgets like wearables and services for streaming music to expand beyond the iPhone, it remains to be seen whether those new products will deliver as much profit as the iPhone.