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Have we reached peak iPhone? It’s complicated

Have we reached peak iPhone? It’s complicated


Apple's predicting a revenue decline next quarter, but China may be as much to blame as the iPhone

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Apple just posted its Q1 2016 financial report, where it posted record revenues and profits once again. But the more interesting thing might be what it's predicting for next quarter, where the company expects to report between $50 and $53 billion in revenue. That would put it below the $58 billion it reported in Q2 2015 and would mark the first year-over-year decline in revenue for the company in years.

The slight decrease can likely be attributed to falling iPhone sales, which have been predicted for some time now. In Q1, Apple reported sales of 74.7 million iPhones, which is just barely better than the 74.5 million it did in the same quarter last year. Apple did not say how many it expects to sell in Q2, but analysts have predicted declines as high as 25 percent. During the investor call following today's report, CEO Tim Cook admitted that "iPhone sales will decline in the [second] quarter," but he noted that the company doesn't expect them to fall as much as outside estimates have said.

There's still lots of money in the bank

The other factor that is pummeling Apple's sales is the overall decline in China's economy, which has affected the greater luxury goods market already. Apple says if currency exchange rates had remained the same as they were 18 months ago, it would have reported $80.8 billion in revenues for Q1, as opposed to the $75.9 billion it actually cleared.

Does this decline in revenue spell the end of the world's wealthiest company? Not likely; it still has $216 billion in the bank, which should let it ride out a few more storms, whether those are related to China or the iPhone.