After setting iPhone record, Apple forecasts rare sales drop

Kagan said he expects the newest version of the iPhone to spur growth, provided it has the right eye-catching new features.

In an analysts’ call, Cook focused on new areas of growth, such as services like Music, Pay and iCloud for the 1 billion Apple devices that were used last quarter. And while sales in Greater China rose 14 percent last quarter, sales there are beginning to slow as well as smartphone penetration in that market approaches the saturation point.

However, while these numbers represent growth, they do no show the sort of explosive climb analysts and investors have grown to expect from Apple. We cautioned in September that with the iPhone 6 stalling, Apple would needs the iPad and TV to save its stock Price. Revenue from the region had almost doubled in the fourth quarter. Revenue would have been up to $80.8 billion, up 8% year over year, on a constant currency basis.

While it would be wrong to say that the iPhone is struggling, the word could arguably be applied to some of Apple’s other products. That’s a large increase from the previous quarter when Apple posted $51.5 billion in revenue and $11.1 billion in profit.

Sales of iPads saw a 56 per cent drop in revenues and 25 per cent dip in unit sales as the market for tablet computers cooled.

“Looking forward, Apple is betting big on China where it sees huge long term growth potential among the emerging middle class, despite the country’s current economic woes”.

Despite all of the above, in a research report sent to clients analysts at Morgan Stanley said “we are positively biased given better than feared March guidance, a growing user base, accelerating Services revenue and new iPhones later this year”.

Kent German, from consumer technology website CNET, said: “Apple had a record quarter profit a year ago – any other company would be jumping up and down”.

With Apple products coveted status symbols in India, just as in China, the company is “increasingly putting more energy” into India, citing a largely youthful population with rising disposable income as more people join the workforce. Clearly the company is expected to feel the heat of a slowdown in the world’s second-largest economy. We will likely cut our fair value estimate for Apple by about 5%, as near-term iPhone unit sales and Apple Watch revenue are poised to come in below our prior projections.