Apple is forecasting a sales decline for the first time in more than a decade, adding to evidence that the market for smartphones is becoming saturated and that expansion in China is no longer enough to maintain the company’s unprecedented run of growth.
Revenue in the first three months of the year will be $50 billion to $53bn, Apple said on Tuesday, the first quarterly drop since 2003 and below analysts’ estimates for $55.5bn. That follows a holiday quarter in which overall sales and iPhone shipments fell short of projections, reinforcing concerns that Apple is reaching the limits of iPhone growth and that a push in China won’t make up for a slowdown in the rest of the world - a sentiment that’s fuelled a stock slide of 20 per cent in the past six months.
While Apple remains immensely profitable - generating a record $18.4bn in net income on sales of $75.9bn in the December quarter - it’s no longer benefiting as much from the rapid adoption of smartphones around the world. Mobile-phone rival Samsung also recently reported weaker-than-expected results. Apple chief executive Tim Cook has expanded in China and released new services and products such as Apple Watch to help broaden the business, but the company’s dependence on the iPhone leaves it vulnerable to any deceleration in demand.
“They have other products, and have the potential to launch other products, but the hole left from an iPhone slowdown is too big to fill,” said Abhey Lamba, an analyst at Mizuho Securities USA. “Its future is whatever is happening in the smartphone space.”
In addition to the iPhone, Apple’s other product lines are also stalling. iPad purchases continued to decline, falling to 16.1 million tablets during the holiday quarter, compared with a projection of 17.3 million. Mac sales fell to 5.31 million, compared with the 5.8 million estimated. IPhone sales rose to 74.8 million units, compared with the average 75 million predicted by analysts.
Apple shares slipped 2.2 per cent in extended trading following the report. They had gained less than 1 per cent to $99.99 at the close in New York.
Luca Maestri, Apple’s chief financial officer, said the company is feeling the effects of a “very different” economic environment around the world. Apple is beginning to see “softness” in China, particularly in Hong Kong, he said.
“You need to take into account the business opportunities that we have, but also the realities of an economic environment that is not ideal right now,” he said. Brazil, Canada, Japan and Russia also are showing signs of slowing down, he said. “There are a lot of economies around the world that are in recession.”
Apple said it’s also being hurt by the strength of the US dollar against foreign currencies, which is trimming revenue. What would have been $100 in sales in the fourth quarter of 2014 is today worth only $85 because of the shift in currency-exchange rates, Apple said in a statement.
For the first quarter, which ended in December, the Cupertino, California-based company reported per-share net income of $3.28. Analysts on average had projected earnings of $3.23 a share on sales of $76.5 billion, according to data compiled by Bloomberg.
The results step up pressure on the company to pack its next iPhone update with new features that will prompt customers to upgrade. IPhone sales exploded after the release of the larger-screen models in 2014, but the latest versions released in September didn’t include many distinctive changes - and sales plateaued.
“The question is whether there has been a secular slowdown of people buying smartphones, said Kim Forrest, a senior equity analyst at Fort Pitt Capital Group, which has about $1.7 billion under management. “The second question is whether customers are still buying iPhones at the same rate in China.”
Apple has been adding tools such as the Apple Music streaming service and Apple Pay digital payments to augment its business, but the challenge is generating enough revenue from new products to move the needle for a company of Apple’s size. Mizuho’s Lamba said that while Apple makes about $300 for each iPhone sold, it takes about 60,000 transactions via Apple Pay to make $100.
Apple didn’t disclose sales for Apple Watch, which isn’t yet a breakout hit with customers in the way that iPhone or iPad were.
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Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
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The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
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Visit Abu Dhabi culinary team's top Emirati restaurants in Abu Dhabi
Yadoo’s House Restaurant & Cafe
For the karak and Yoodo's house platter with includes eggs, balaleet, khamir and chebab bread.
Golden Dallah
For the cappuccino, luqaimat and aseeda.
Al Mrzab Restaurant
For the shrimp murabian and Kuwaiti options including Kuwaiti machboos with kebab and spicy sauce.
Al Derwaza
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