Apple reports first revenue drop since 2003
SAN FRANCISCO >> Apple sold more than 51 million iPhones in the first three months of this year — and that's the problem.
That's 10 million fewer iPhones than the tech giant sold during the same quarter a year ago. As a result, Apple on Tuesday reported its first drop in quarterly revenue in 13 years — and the first-ever year-over-year decline in iPhone sales.
The slide is putting more pressure on Apple and CEO Tim Cook to come up with its next big product.
Cook, of course, has problems many corporate bosses would kill to have. Despite the decline in sales, Apple managed to rack up $10.5 billion in profit for the quarter.
"The future of Apple is very bright," Cook told analysts on a conference call Tuesday.
But Apple is battling perceptions that its latest iPhones aren't that different from previous models, at a time when overall smartphone sales are slowing around the world. Apple also sells iPads, Mac computers and other gadgets, but nearly two-thirds of its $50.6 billion in quarterly revenue came from iPhones.
In need of boost
"They need to come out with that next great product," said Angelo Zino, a financial analyst with S&P Global Market Intelligence. Zino said that while he is optimistic about the company's future, "Apple absolutely needs to start diversifying their revenue base."
Overall, the company's revenue in the January-March quarter was down 13 percent from a year earlier. And the company surprised analysts by forecasting another revenue drop of 13 percent or more in the current quarter.
The forecast, which was announced after Apple had closed for the day at $104.35 a share, drove its stock price down 8 percent in extended trading.
Apple hasn't reported a year-over-year sales decline since 2003, when the iPod was still relatively new and the iPhone didn't exist. Since then, the iPhone and other products have propelled the company's stock value from $5 billion to $579 billion, making it the most valuable public company in the world.
Despite the quarterly decline, Chief Financial Officer Luca Maestri defended the iPhone business in an interview with The Associated Press.
"We think we can continue to bring a lot of innovation to the market," he said of future models, while adding that Apple is working to expand other lines of business.
Apple's revenue for the quarter included $6 billion from online services, apps and other software, he noted. That's up 20 percent from a year earlier. Analysts agree the figure could rise further, given that there are more than 500 million iPhones in use.
Many were hoping the Apple Watch would be the company's next big hit when it went on sale a year ago. Apple hasn't revealed sales figures for the watch, but most analysts estimate the company has sold 12 million or more, producing well over $5 billion in revenue. That's more than twice the number of iPhones sold in the first year after it was introduced in 2007.
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