Apple earnings decline for the first time since 2003, but $10.5 billion is still $10.5 billion

A 'busy but challenging quarter,' says Tim Cook

Apple made $50.6 billion (about £34.7b, AU$65.3b) in revenue last quarter, but that isn't enough to continue its 13-year winning streak, as it experienced its first revenue decline since 2003.

Calling it a "busy and challenging quarter," Apple CEO Tim Cook said that the company still sold 51.1 million iPhones. The company also sold 10.2 million iPads and 4 million Mac computers.

These sales have led Apple to make $10.5 billion (about £7.2b, AU$13.55b) in profit from January to the end of March. A year ago, the same quarter yielded $13.6 billion (about £9.3b, AU$17.6b) on $58 billion (about £39.7, AU$74.8) in revenue. Coincidentally, it's a 13% revenue drop year-over-year.

China is where Apple is hurting the most, with a marked 26% decline in revenue. In fact, all regions of the world are down except for Japan, which saw 24% growth.

Cook sees some good news

It's not all bad news for Apple. First, it still generated more than $50 billion (about £34.3b, AU$64.5b) in revenue and sold more than 50 million iPhones. It's not the only company experiencing market saturation.

Second, Cook mentioned that its growth in Android to iPhone switchers is at all all time high and that its new business in services is booming (that includes the App Store as well as iCloud and Apple Music subscriptions).

The company has yet to break out Apple Watch sales on its own, and instead is lumping it into "Other Products."

But Cook did tout Apple Watch sales as exceeding that of the iPhone in its first year. Translation: it's not a complete dud, but actual sales still remain a mystery. No Apple Watch 2 teases, however.

Finally, Cook reminded everyone that its mid-cycle iPhone SE and iPad Pro 9.7 sales aren't reflected in today's revenue report. Both launched at the end of March, just as these numbers were being tabulated.

Bigger questions

Clearly, Cook is trying to be optimistic, but the 13-year end to Apple's winning streak is the main story here and it's tough to see where the company can expand with sales of the iPhone and other products.

The Apple CEO talked about harnessing LTE in developing markets like India to unleash the power of the iPhone there. India is the third-largest smartphone market in the world, and current market potential isn't great there for a high-end phone. Cook called it the next China that's seven to eight years out.

Apple also needs to make R&D a priority and dive into new product categories. It's reportedly working on an Apple VR headset and an Apple Car, but it needs to tease high-profile innovations like this eventually.

We could see hints of these more intriguing Apple product categories at WWDC or the iPhone 7 launch that is expected in September. Let's just hope the next flagship phone isn't a boring specs bump.

Tags