Apple reports quarterly results below Wall Street targets and forecasts another disappointing quarter. John Russell reports.
Apple on Tuesday (April 26) posted its first-ever decline in iPhone sales and first revenue drop in more than a decade as the company credited with inventing the smartphone struggles with an increasingly saturated market. The company's sales dropped by more than a quarter in China, its most important market after the United States, and it also forecast another disappointing quarter for global revenues. Analyst Frank Gillett at Forester. SOUNDBITE Analyst Frank Gillett at Forester, saying (English): "It looks to me like several issues coming together at the same time. Market saturation, competition from low-cost phones, and then this question of whether people are keeping their phones longer. I don't think you can say that there's one clear factor. But clearly, the dynamics are changing in terms of the volume that they're going to sell every quarter." While Apple executives had predicted iPhone sales would decline this quarter, they must reassure investors that the drop represents a momentary roadblock, rather than a permanent shift for the product that fueled its meteoric rise. The company has yet to present another device that can drive sales on that order, though last year it released the Apple Watch, its first new product without legendary co-founder Steve Jobs at the helm. SOUNDBITE Analyst Frank Gillett at Forester, saying (English): "It doesn't look like there is anything that would drive significant growth for Apple from here as they've been behaving. Now, you know, if they came out with a breakthrough product or price, then you might see a change, particularly if it's different than the other smartphone makers in this market, but absent that kind of innovation in price or features, I think we're in a much more gradual and uncertain market." Rather than buying the iPhone 6S and 6S Plus, many consumers are waiting for the release of the expected iPhone 7 later this year to upgrade their phones, according to analysts.