Apple Posts First Revenue Decline In More Than A Decade

Justin SullivanGetty Images

Apple’s earnings report Tuesday revealed a mixed bag of results, posting the first revenue decline in more than 10 years, Business Insider reports. Struggling iPhone sales and challenge in the Chinese market were significant contributors as revenue dropped by 4.5 percent year over year.

Weeks ago, the company issued a profits warning in hopes of preparing investors for today’s news. It was the first such warning of the iPhone era for Apple. At the time the warning hit stock prices hard, making a $55 billion dent in the Apple’s public valuation. The stock has since recovered.

Apple CEO Tim Cook spoke to the challenges in China, revealing a substantial 36 percent drop in sales in the region across their major product lines, including iPhones, Mac computers, and iPads. Similarly, the company’s services business in China also suffered, with a decline in software-based revenue including subscription feeds and commission from App Store purchases.

Although the earnings announcements were largely unsurprising based on analyst research and the company’s preemptive statements about profitability, the report came on the heels of a challenging news cycle for Apple. This week a major bug in Apple’s FaceTime video chatting platform was revealed to be allowing users to listen in on those they were calling before the person answered.

Aside from international sales and FaceTime woes, Apple generally struggled with declining iPhone sales due to a number of factors. As smartphone prices in general and iPhone prices in particular reach record highs, consumers are hanging onto their phones for longer, often delaying upgrades or repairing older devices. At the same time, major wireless carriers are scaling back the subsidies available for new phones, forcing consumers to pay more out-of-pocket for top-of-the-line phones. Overall, iPhone sales over the usually reliable holiday period fell by about 15 percent.

In general, despite spotty performance in a number of key areas, investors were largely expecting the news released. Apple stock rose 6 percent after the earnings call, with many analysts indicating that Apple remains in a strong position for the future, having perhaps put the worst behind them for the moment.

“We don’t measure our success in 90-day increments, Apple CEO Tim Cook said in response to the earnings report. “We manage Apple for long term…We are as confident as ever in the fundamental strength of our business.”

Also on the call, Apple revealed for the first time the number of active iPhone users worldwide: 900 million.