Apple Posts Slowest iPhone Growth Since Smartphone’s Introduction

Apple posted its slowest growth in iPhone sales since its 2007 introduction of the smartphone, and forecast that revenue in the current quarter would fall for the first time in over a decade.

The Cupertino technology giant said it shipped 74.8 million iPhones in its fiscal first quarter, a modest 1 percent improvement over a year ago December, when it sold 74.5 million smartphones.

Analysts have been saying for months that Apple would have trouble matching — let alone surpassing — last holiday season’s record sales of the iPhone 6 and 6 Plus, which tapped into pent-up consumer demand for big-screen smartphones. Researchers, including Strategy Analytics and IDC, predicted Apple’s first-quarter worldwide shipments would fall short.

Apple still remains heavily dependent on the performance of its smartphones, which account for more than 60 percent of its revenue. New products, such as the Apple Watch, have been slow to take off, and established products such as the iPad have been in decline for the last two years. Even Mac sales fell compared with a year ago.

The December quarter’s results also were impacted by a cooling Chinese market, which has emerged as Apple’s second largest, behind the Americas. Sales were up a modest 14 percent compared to a year ago.

Overall, Apple reported record earnings of $18.4 billion, or $3.28 per share, on record revenue of $75.9 billion for its fiscal first quarter. Earnings exceeded analyst forecasts of $3.23 per share. The sales fell within Apple’s guidance, but short of Wall Street’s projections of $76.6 billion for the quarter.

Apple forecast revenue of between $50 billion and $53 billion for its March quarter. That’s below Thomson Reuter’s consensus estimates of $55.7 billion.

Chief Executive Tim Cook told investors that he expects iPhone sales to decline in the March quarter, compared to sales a year earlier — which would mark a first for Apple. That’s party because of difficult comparisons to the launch of the iPhone 6 and 6 Plus, which were still in hot demand but short supply in the spring quarter.

Global economic factors also come into play for a colossus like Apple, which derives two-thirds of its revenue from outside the U.S. Cook talked about the “overall malaise in virtually every country in the world” — slowing growth and weakening currencies — as having an impact on the coming quarter’s sales.

Cook remains bullish on China, where the middle class is projected to grow to a half-billion people in the next four years. The company continues to invest in retail stores there, with 40 open by this summer.

“Beyond short-term volatility, we remain very confident about the potential of the China market,” Cook said. “We’re maintaining our investment plans.”

This article originally appeared on Recode.net.