Quarter marked another quarterly decline in profit and revenue as the company struggled to move beyond the iPhone

This article is more than 1 year old

This article is more than 1 year old

Apple’s iPhone sales fell 17% in the first three months of the year as the company’s flagship product continued to struggle.

The tech company reported revenues of $31.05bn in iPhone revenues for the quarter, the majority of the $58.bn in revenues Apple brought in over the three months.

The news was less gloomy than expected and Apple’s shares spiked 5% in after-hours trading as Apple announced it was buying back another $75bn of its shares.

The company made a profit of $11.6bn – ahead of expectations. But this quarter marked another quarterly decline in profit and revenue as the company struggled to move beyond the iPhone.

In January Apple reported its first decline in revenues and profits in over a decade as slowing sales of iPhones and an economic slowdown in China took their toll.

Those results came after the chief executive, Tim Cook, shocked investors by issuing Apple’s first profits warning since 2002 citing “the magnitude of the economic deceleration, particularly in greater China”.

The company has stopped reporting unit sales of iPhones – leaving analysts searching other sources of data for their estimates. Most do not expect a recovery in sales until the next generation of phones, using the super-fast 5G network, are launched, likely to be in 2020.

In the meantime Apple is repositioning itself as a services and software company as well as the manufacturer of hardware.

“Investors are slowly shifting their focus away from the iPhone cycle and valuing the company more based on the ecosystem of hardware, software, and services, but it will take several years for this to become consensus,” Gene Munster, managing partner of Loup Ventures, wrote in a blogpost this week.

Apple’s services segment, which includes products like Apple Pay, Apple Care and Apple Music, posted a record $11.5bn after reporting a record $10.9bn in the last quarter.

Last month Apple unveiled a host of new subscription services, Apple TV+, at a star-studded event attended by Oprah Winfrey, Steven Spielberg, Reese Witherspoon and Big Bird. It has also announced Apple Card, a credit card backed by Goldman Sachs and MasterCard.

“Our March quarter results show the continued strength of our installed base of over 1.4bn active devices, as we set an all-time record for services, and the strong momentum of our wearables, home and accessories category, which set a new March quarter record,” said Tim Cook, Apple’s chief executive officer.

Yoram Wurmser, eMarketer principal analyst, said: “The long-term growth in services and, to a less extent, other devices depends on having as many users as possible in the Apple ecosystem, and that’s still primarily about the iPhone. So, it’s worrisome that iPhone sales fell 17% year on year. Moreover, sales in China fell 22%, so the issues in that market remain. Services did rise 16% and wearable, home and accessories grew a strong 30%, but the long-term growth of the company still depends directly and indirectly on iPhone sales.”