Apple’s first quarterly slump in years: revenue down 12% as iPhone sales drop

Apple today reported a $10.51 million profit, or $1.90 per diluted share, on $50.55 billion in revenue for the second quarter of its 2016 fiscal year, which ended on March 26. Analysts were expecting $2 in earnings per share on $51.97 billion in revenue.

Apple’s guidance for the quarter was for $50-53 billion in revenue, which is well below $58.01 billion, which is what Apple actually came through with a year ago.

Last quarter was a whole lot better for Apple; it announced the largest profit of any public company ever — $18.36 billion — and $75.87 billion in revenue.

The big news today, ultimately, is that while Apple remains the world’s most valuable company, its very long run of constant year-over-year revenue growth has finally come to an end.

Of course, lackluster iPhone sales have a lot to do with this. Revenue from the iPhone dropped 18 percent, from $40.28 billion to $32.85 billion. Meanwhile, iPad revenue slid 19 percent, going from $5.42 billion to $4.41 billion. Mac sales also went down, from $5.61 billion to $5.1 billion, amounting to a decline of less than 10 percent. (Apple still has not disclosed revenue or unit sales for the Apple Watch, which has been available for a year now.)

On a geographical basis, much of Asia was particularly disappointing for Apple. Revenue from greater China decreased by 26 percent. Japan was a bright spot, with revenue jumping 24 percent. The thing is, Apple’s business in greater China is almost three times as large as it is in Japan.

But hey, services revenue has gone up by 20 percent, to $5.99 billion. That’s more than what the company brought in from Mac sales or from iPad sales.

“We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices,” Apple chief executive Tim Cook said in the company’s earnings press release.

And Apple has plenty of cash to work with — $21.51 billion in cash and cash equivalents, to begin with.

Finances aside, this quarter was particularly rocky for 40-year-old Apple because of its battle with the U.S. government over iPhone encryption.

Apple also released the iPhone SE and the 9.7-inch iPad Pro. And its OS X operating system for Macs turned 15. The company said it would be shutting down its iAd App Network, as well as iTunes Radio.

Apple gave guidance of $41-43 billion in revenue for the third quarter of its fiscal year. That would be below the $49.6 billion figure that Apple came up with for its most recent third quarter.

Apple stock was down 8 percent in after-hours trading.