Apple's iPhone growth hits a wall - CNET

The numbers -- massive for any other company but worrisome for Cupertino, Califoia-based Apple -- underscores the cooling attitude toward phones in general. The problem is Apple's next big thing, whether it's the Apple Watch or a bigger iPad, hasn't really gotten us excited either.

Last year, Apple sold 74.5 million units in the fiscal first quarter. The popularity of the redesigned iPhone 6, released in September 2014, led Apple to report the highest profit ever of any public company in last year's first quarter.

But the latest iPhone models, the 6S and 6S Plus, didn't add enough new features to prompt customers in places like the US to upgrade. In addition, the economy in China, one of Apple's most important markets, has been struggling and may have put a damper on the willingness of consumers there to snap up a new phone.

In the December quarter, sales in Greater China, which includes mainland China, Taiwan and Hong Kong, rose 14 percent to $18.4 billion. The region has been one of Apple's most important markets in recent quarters and even surpassed the US to become Apple's biggest iPhone market in last year's March quarter.

March wobbles

Analysts had largely expected Apple to post a slight increase in this year's first-quarter iPhone sales but hit a speed bump in the current March quarter. More than 10 of the company's major suppliers have waed business has slowed down in recent weeks, and it was hard to imagine Apple immune to those woes. Before Tuesday's report, analysts projected Apple would sell 55 million iPhones in the second quarter, according to UBS.

"There are downside conces given continued negative data points from the supply chain as well as continued currency deterioration, particularly in China," UBS analyst Steven Milunovich said in a note before Apple's eaings release.

For the March quarter, Apple projected revenue of $50 billion to $53 billion, down from $58 billion last year. Analysts polled by Thomson Reuters had expected sales of $55.48 billion. The decline would be Apple's first drop in a decade.

In the December quarter, Apple reported revenue of $75.9 billion, compared with $74.6 billion in the year-earlier period. Wall Street had expected sales to total $76.5 billion.

Net income increased to $18.4 billion, or $3.28 a share, from $18 billion, or $3.06 a share, last year. Analysts estimated per-share eaings of $3.23 a share.

iPad and Mac declines

Apple's iPad business continued to struggle during the quarter despite the introduction of the 12.9-inch iPad Pro. The company launched the device in November to attract business users and other buyers to its tablet line, which has been struggling for the past couple years.

Hands-on with the iPad Pro (pictures)

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Overall, iPad unit sales dropped 25 percent to 16.1 million. Analysts polled by Fortune expected it to sell 17.8 million units. This quarter's sales decline marks the eighth time in a row iPad sales have fall from the previous year.

Macintosh computer sales also slid in the period, down 3.8 percent to 5.3 million. Analysts projected sales of 5.8 million.

Apple didn't break out Apple Watch sales figures. The company lumps the device in with "other products" like iPods. Revenue for that segment grew 62 percent to $4.4 million. Analysts polled by Fortune believe Apple sold 5.5 million Apple Watches during the December quarter.

Apple shares rose 0.6 percent to $100.04 in after-hours trading.