Apple Sees Third Straight Quarter of Falling Sales

 Apple said revenue declined for the third consecutive quarter, the company’s most prolonged sales slump since 2016 as the iPhone-maker continued to deal with declining demand for consumer devices.

Overall iPhone revenue, generally a primary driver of Apple’s profits, missed estimates and fell compared with last year, but Chief Executive Tim Cook highlighted strong sales in emerging markets.

The Wall Street Journal reports the Cupertino, Calif.-based tech giant posted sales of $81.8 billion for the quarter ended in July, down 1.4% from the prior year. but largely in line with analyst estimates. Net income was up 2.3% annually at $19.9 billion. The company’s all-important iPhone sales fell 2.4% to $39.7 billion, missing analysts expectations of $40.2 billion in iPhone revenue.

Apple said revenue in its services unit reached a new all-time high of $21 billion, driven by more than one billion paid subscriptions to offerings such as streaming music, TV products or spending software in the App Store.

It’s been about seven years since Apple has seen three straight quarters of falling revenue, when it ended its fiscal 2016 with sales down 7.7% annually, mostly due to declining iPhone sales. The same phenomenon is behind Apple’s slump in 2023, although investors and analysts generally remain optimistic that the company will find a way to maintain and grow its dominant position in consumers’ lives.

Luca Maestri

Apple recently announced its first major new hardware product in nearly a decade with the Apple Vision Pro, a headset that combines virtual reality with placing digital content in the environment around the user. But for the $3,499 device, first-year unit shipments are expected to be below a million and investors don’t expect the product to start contributing meaningful revenue quickly.

Apple Chief Financial Officer Luca Maestri in an interview said that the company set all-time records for a number of its services businesses, including advertising and video. Subscriptions increased 150 million over the past year, and doubled from three years ago, he said.

“People spending on services shows that economic activity is good,” Maestri said. “For us, services are a leading indicator of the strength and health of our ecosystem. It means that our customers are very engaged with our devices.”

For the current quarter that ends in September, Maestri told investors that the company expects its iPhone and services businesses to accelerate year-over-year.

Apple’s next major iPhone upgrade—likely called the iPhone 15—is expected in September, typical of the company’s annual hardware launch cycle. The iPhone currently accounts for roughly half of Apple’s overall sales, compared with nearly two-thirds of revenue in 2016.