Apple has reported a 13% drop in its second quarter revenue on Tuesday, attributed to a fall in the sales of iPhones.
This is the first fall in sales for the company since 2003. Its shares have fallen close to 20% over the last twelve months.
Apple reported quarterly sales of $50.56bn (£34.39bn), down from $58bn last year.
Apple sold 51.2 million iPhones during the quarter, down from 61.2 million in the same quarter of last year. The sales of iphones in the Chinese market fell by 26%.
Results of the company were also adversely impacted of a stronger dollar.
Apple shares fell 8% in after hours trading.
Apple’s chief executive Tim Cook said the company performed well “in the face of strong macroeconomic headwinds”.
Analysis Of Falling Revenues
Apple has not been as much impacted by the declining sales in established markets as much as it has been impacted by the declining sales in the Chinese market.
China has always propped up the earnings of the company by posting record-breaking profits.
Therefore, the declining sales in China have had an adverse effect on the revenues of the whole company.
With the iPhone sales officially in decline, the investors have termed the recent events as the end of a golden age for hardware makers, with the smartphone boom past its extraordinary peak.
Even though the Apple Watch is bringing in an estimated $1bn each quarter for the company, the company needs another product like the iPhone to pull up its falling revenues.
Apple’s quarterly profit slipped to $10.5bn from $13.5bn.
Nevertheless, Apple has announced a $50bn return to shareholders through an increase in share buybacks and a 10% increase in quarterly dividends.
Slowdown in Sales
In January, Apple announced that it was experiencing its slowest-ever increase in orders for iPhones and that this would impact its second quarter earnings.
“The industry is in a lull between the mobile boom and what comes next in automotive, the connected home, health and industrial applications of the internet of things,” said Geoff Blaber, from CCS Insight.
Declining growth in smartphone sales has had an impact on the entire industry and companies are struggling to find the next area of innovation.
However, Apple experienced a 20% growth in its services unit, as compared with the same quarter in 2015,which includes App Store downloads, Apple Pay and Apple Music.
However, growth in the services unit is likely to be threatened by a new law in China passed in March that requires all content shown to Chinese people to be stored on servers based on the Chinese mainland.
As a result of the new law, Apple’s iBooks and iTunes movies service were shut down in China.