Apple iPhone sales up 0.4% in quarter, after years of double-digit growth

Apple Inc. reported a 0.4 per cent increase in iPhone sales in the holiday quarter, far short of the double-digit growth investors have come to expect.

And a forecast drop in sales for the March quarter added to the perception that the tech leader is losing its reputation for innovations.

Apple sold 74.8 million iPhones in the quarter that ended on Dec. 26, recording its lowest increase since the phone was introduced in 2007.

At the same time, it reported record profit and revenue in that quarter. Profit was $18.36 billion US, up from $18.02 billion, while revenue increased 1.7 per cent to $75.87 billion, also a record.

Demand has weakened for the iPhone 6S and 6S Plus, launched last September, as they have have fewer distinguishing features than their popular predecessors.

"Apple has become a victim of their own success," FBR Capital Markets analyst Daniel Ives said. "... many customers are either buying an older, cheaper iPhone 6 or waiting for the iPhone 7."

China, the company's fastest-growing market, boosted revenue by 14 per cent and represented almost a quarter of the company's sales.

But analysts warn the economic slowdown in Asia will cut into Apple's growth going forward. The strong U.S. dollar is hurting Apple in many markets.

Apple forecast second-quarter revenue of $50 billion to $53 billion, below analysts' average forecast of $55.6 billion.

"It wasn't just this quarter that everybody was worried about. It's actually next quarter and... it wasn't as bad as some on the street had anticipated," said Troy Crandall, vice-president and equity analyst with MacDougall, MacDougall & MacTier.

Apple has projected iPhone sales for the March quarter at near the 50 million level.

"It will be the first time it has seen a drop in its iPhone units. But that was expected. A lot of suppliers that had provided parts to Apple had warned they would be down," Crandall said.

Apple shares have fallen nearly 10 per cent since the start of October and after-hours trading in the stock was volatile.

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