Apple INC on Tuesday has posted its shrinkage in iPhone sales for the first time since 2003. Apple shares fell 8% in after hours trading and have fallen close to 20% over the last twelve months.
Apple reported a 13% drop in its second quarter revenue on Tuesday as sales of iPhones slipped. Apple sold 51.2 million iPhones during the quarter, down from 61.2 million in the same quarter of 2015.
Slowing sales in established markets hasn't been too much of a problem for Apple, as China has always been there to prop up its earnings and keeps it posting quarter after quarter of record breaking profits. But the company's sales dropped by more than a quarter over there, aad it also forecast another disappointing quarter for global revenues.
Some have believed that Apple has come to its saturation point after passing extraordinary peak, spelling the end for Apple's exponential growth.
Apple's quarterly profit slipped to $10.5bn from $13.5bn.
Nevertheless, it announced it would return $50bn to shareholders through an increase in share buybacks and a 10% increase in quarterly dividends.
As suggested by Neil Saunders, Chief Executive of research firm Conlumino “ Apple needs to come up with more exotic innovation and technology upgradation than just the current incremental improvements to existing products in order to rejuvenate its sales growth.
In March, Apple released the iPhone SE, a smaller, 4-inch-screen phone featuring much of the company's latest technology. Although sales of the phone were not captured in the second quarter, the device is off to a strong start, particularly in emerging markets, Mr. Maestri said.
Although Apple's revenue in Greater China fell 26 per cent from a year earlier, Mr. Maestri stressed the company was “extremely optimistic” about China.