Apple announced solid revenue numbers Tuesday, but also reported troubling iPhone growth numbers that point toward larger sales declines in the current quarter.
The company said it sold 74.8 million iPhones in its December-ending quarter, less than one percent more than sales in the same quarter last year. In fact, it’s the slowest growth in iPhone sales since 2007, falling well short of analysts’ expectations of 76.5 units.
The iPhone, which has seen explosive growth since the launch of the iPhone 6 in 2014, contributes roughly a third of Apple’s revenues.
The company posted a string of quarters with double-digit sales gains since the iPhone 6 launch.
On a conference call with analysts Tuesday, Apple CEO Tim Cook was asked to speak to the implied 15% to 20% decline in the current quarter. “We don’t think they’ll see declines to the levels your talking about,” Cook said. Cook suggested that last year’s March quarter had unusually high sales because of lacking iPhone inventory. “Q2 is the toughest compare because you may remember that we were backed up in the first quarter of last year, and some of that demand moved over into Q2.”
In 2015, Apple’s share of U.S. smartphone users rose to 43.3%, up from 42.3% in 2014, eMarketer says. Android, by comparison, saw its share of U.S. smartphone users rise to 51.7% in 2015, up from 51.3% the previous year.
But Apple will almost certainly report negative iPhone sales growth in the current quarter when it next announces earnings in March.
Apple forecast revenues of between $50 billion to $53 billion. Thompson Reuters analysts are expecting revenues of $55.47 billion. The Wall Street Journal points out that if Apple reports revenues at the midpoint of its projection it would represent the worst decline at Apple since the summer of 2001.
A consensus of Wall Street analysts projects that Apple will sell 54.6 million iPhones in the current quarter. Piper Jaffray analyst Gene Munster estimates that the revenue projections imply iPhone sales of around 50 million to 52 million iPhones for the March quarter.
Munster adds that if Apple sells 51 million iPhones in the current quarter it would represent a 17% decline over last year’s March quarter.
Piper Jaffray remains bullish on Apple in general. “We continue to expect the multiple on Apple to expand as we move toward the iPhone 7 launch in September,” Munster wrote in a research note Tuesday. “Apple remains our top pick for 2016.”
Apple said a big factor in its unit sales results for the quarter are economic factors depressing some international markets. But Apple is content to wait out the storm. “We do believe that this too shall pass, and that these countries like Russia and Brazil are very tied to oil prices,” Cook said on the conference call.