Apple Inc. is about to report that it had its worst quarter in thirteen years, CNN Money reported on Monday.
Apple is expected to announce by Tuesday morning that its profits and sales both fell in the last quarter, a rare event for the multinational tech giant. Apple has been growing at a rapid pace for years, becoming the largest consumer electronics company in the world.
This news may come as a shock, seeing as how the last time Apple posted its earnings, it was not only the most profitable period in the history of the company, but the single most profitable quarter in all of corporate history. For the first quarter of 2015, Apple posted $13.6 billion in profit. For the fiscal year ending September 2015, according to its official website, Apple reported a staggering worldwide revenue of $233 billion, roughly equivalent to 1.25 percent of the GDP of the United States.
But now, the company has recently fallen on hard times due to sinking sales of the iPhone and Apple’s other signature electronics. The forecast for earnings for the first quarter of 2016 is $11.1 billion, or down by 18 percent from early 2015, marking the first quarter Apple’s profit has fallen since the last quarter of 2013.
The iPhone made $61.2 million in the first quarter of 2015, as opposed to the forecasted $50.4 million for the first quarter of 2016, representing a loss of 18 percent. Sales of the famed smartphone have fallen for the first time since its debut in 2007. Apple CEO Tim Cook predicted back in January that iPhone sales would drop for the first time, and told CNN that 60 percent of iPhone users hadn’t upgraded to iPhone 6 or 6 Plus, or any of the other new models.
Two-thirds of the company’s revenue comes from the sale of iPhones, and this quarter has been dismal for Apple’s signature device. Ever-declining sales of the iPad and the moribund demand for Mac aren’t helping Apple’s revenue, either.
Sales of the iPad fell for their ninth straight quarter, from $4.6 million in the first quarter of 2015 to a forecasted $10.1 million for the first quarter of 2016, or a loss of 20 percent. Sales of the Mac flatlined at $4.6 million, the forecasted numbers for early 2016 neither surpassing nor falling below its early 2015 numbers, though sales of personal computers fell by 10 percent overall last quarter, and Apple is outpacing the rest of the industry. Prior to this, sales of the Mac had risen for eight quarters in a row.
CNN put this heavily symbolic drop in profits in historical perspective for the seemingly unstoppable electronics giant.
“The last time Apple’s sales fell year over year was the first quarter of 2003. At that time, the PowerMac was still the company’s bestseller. Apple had sold a grand total of 611,000 iPods to that point. And Apple hadn’t yet launched the iTunes Music Store. But as rare an event as an Apple sales decline is, Wall Street analysts are expecting an even rarer occurrence last quarter — a double-digit sales loss. Apple hasn’t suffered that kind of ignominious fate since the fall of 2001. At that point, Windows 98 was the dominant computer operating system, and no one knew what an iPod was, because it hadn’t been introduced yet.”
Overall, sales for 2015’s first quarter topped $58 billion. The first quarter of 2016 reportedly brought in $52 billion, a loss of 10 percent in total sales. Wall Street analysts say the current quarter is expected to show declining sales as well. The second quarter of 2016 shows $47.4 billion in sales, and analysts are saying the third is expected experience falling revenue, too.
Apple recently celebrated the fortieth anniversary of its founding on April 1 of this year. The company was founded in Cupertino, California, in 1976.
[Photo by Mario Tama/Getty Images]