Apple goes pear-shaped as 13 years of growth ends

A growing preference among consumers for lower-priced iPhones contributed to a significant shortfall for Apple in its latest quarterly earnings, compared with Wall Street expectations, according to figures released yesterday.

The US tech company reported revenues of $50.6bn and earnings of $1.90 a share, compared to the $52bn (€46bn) and $2 a share most analysts had expected.

Net income fell 22% to $10.5bn, or $1.90 a share.

The shares fell almost 5% in after- hours trading yesterday as a period of 13 years of continuous growth came to an abrupt end.

Apple reported quarterly results below Wall Street targets and forecast another disappointing quarter, as sales of iPhones, its most important product, declined for the first time.

Apple also said it was raising its capital return programme by $50bn through a $35bn increase in its share buyback authorisation and a 10% rise in the quarterly dividend.

Apple said it sold 51.2 m iPhones in its second fiscal quarter, down from 61.2m in the same quarter a year ago but above analysts’ estimates of about 50m devices.

Apple forecast third-quarter revenue of $41bn to $43bn, short of the Wall Street consensus of some $47.3bn.

While Apple executives had predicted iPhone sales would decline this quarter, they must reassure investors that the drop represents a momentary roadblock for the company, rather than a permanent shift for the product that fuelled its meteoric rise.

After years of blockbuster sales, many investors fear that the iPhone has reached a point of saturation, spelling the end for Apple’s era of exponential growth.

The company has yet to present another device that can drive sales on that order, though last year it released the Apple Watch, its first new product without legendary co-founder Steve Jobs at the helm.

Rather than buying the iPhone 6S and 6S Plus, many consumers are waiting for the release of the expected iPhone 7 later this year to upgrade their phones, according to analysts.

Apple had planned to release its quarterly results on Monday but delayed the event by a day due to the memorial service for Bill Campbell, a longtime Apple board member who mentored many prominent executives in Silicon Valley.

China, Apple’s second-largest market after the US, is experiencing an economic slowdown and recently shut down Apple’s e-book and digital movie services in the country.