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Apple reported lower sales and forecast a third straight quarterly revenue drop, dragged down by slowing demand for iPhones amid a lacklustre global smartphone market and intensifying competition in China.
Fourth-quarter revenue will be $US45.5 billion ($60.8 billion) to $US47.5 billion, the Cupertino, California-based company said on Tuesday. On average, analysts projected $US45.5 billion. A year earlier, sales were $US51.5 billion.
Gross margin in the period that ends in September will be 37.5 per cent to 38 per cent.
Fiscal third-quarter revenue fell 15 per cent to $US42.4 billion. Analysts had predicted revenue of $US42.1 billion. The drop marked the first back-to-back quarterly sales declines since 2002, according to Bloomberg data. Revenue from greater China slumped 33 per cent.
IPhone unit sales for the quarter fell 15 per cent from a year earlier to 40.4 million. Still, that exceeded the average estimate of 39.9 million.
With the iPhone accounting for almost two-thirds of sales, Apple has felt the brunt of a slowdown in the global smartphone market.
That's been made worse by deterioration in China, where consumers are choosing cheaper handsets over Apple products, even the low-end iPhone SE introduced earlier this year.
Chief executive officer Tim Cook has sought to emphasise surging revenue from services, such as the App Store, iCloud storage and Apple Music, as a way of making up for cooling device sales.
Yet those businesses represent just a fraction of revenue compared with the iPhone, which may not be significantly revamped until next year as consumers wait ever longer to upgrade their handsets.
"We had a June quarter that was better than we had expected 90 days ago," chief financial officer Luca Maestri said. "The March quarter seems to have been the low point for the cycle."
"There are some macro conditions that exist in China, both in mainland China and in Hong Kong." he said. "The economy has slowed down and the foreign exchange rate has weakened."
Third-quarter net income fell 27 per cent to $US7.8 billion, or $US1.42 a share, compared with analysts' average per-share forecast of $US1.39.
Apple shares slipped less than 1 per cent to $US96.67 at the close in New York. The stock has fallen 8.2 per cent so far this year.
Third-quarter iPad shipments were 9.95 million. Analysts projected an average of 9.1 million units.
Apple said it sold 4.25 million Mac personal computers, compared with an estimate of 4.4 million.
Services revenue rose 19 per cent to $US5.98 billion.
Bloomberg