Apple reports third consecutive quarterly decline as iPhone sales continue to slow

The big story over the last six months of Apple earnings has been the dreaded decline in iPhone sales. After more than a decade of record-setting revenue growth, the company finally saw consumer demand for its flagship smartphone dip down. During the fiscal fourth quarter ended September 24, Apple continued that trend with revenue shrinking 9.8 percent to $46.9 billion from the same period one year earlier. This decline was mainly driven by weak sales of the iPhone, which dropped 13 percent year over year, that were not offset by the improved performance of Apple’s Services division and Mac product lines.

Dips in iPhone sales are pushed Apple toward a year over year decline

As hardware sales plateaued, CEO Tim Cook has tried to shift Apple narrative, promising that the recurring revenue from its cloud services and streaming software would help to pick up the slack. That trend remained strong to deliver this quarter, with revenue from Services growing 24 percent to $6.3 billion over the same period last year.

The latest iteration of its flagship device, the iPhone 7, made fewer dramatic changes than Apple typically presents in a new generation of smartphone. This quarter only took into account two weeks of iPhone 7 sales. Looking ahead, Apple's guidance for the quarter ending in December forecasts revenue higher than analyst expectations. That means the iPhone 7 is selling as expected. The company is also unveiling a whole suite of new Mac products on Thursday, which may also be a factor bolstering its forecast.

The Apple Watch has been touted by the company as a multi-billion dollar business, already rivaling many storied watch brands. But so far Apple has not delivered a breakout detailing the number of units sold per quarter. That remained the same this quarter, with Apple Watch revenue lumped into Other Products instead of being broken out as its own category of flagship devices.


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