Though the earnings announcement was disappointing in the face of past successes, Apple is hardly hurting: Second quarter net income was $10.5 billion on revenue of $50.6 billion. While the smartphone market globally may be hitting the saturation point, Apple CEO Tim Cook noted that the iPhone, which accounts for 65% of the company’s revenue, can still take share from Android users and grow globally. Wall Street is expecting Apple to grow revenue by under 4% in fiscal 2016, compared with a 28% revenue expansion in the last fiscal year, Thomson Reuters reported in January. By contrast, in fiscal 2011, Apple sales were $108.2 billion, which was up from $36.54 billion in fiscal 2009. “Few companies in history have ever had a product as successful as the iPhone, so it’s a bit much to expect that Apple find a second one.”Īpple’s sales for the fiscal year ending Sept 30, 2015, were $233.7 billion, up from $182.8 billion in fiscal 2014. Apple has had an extraordinary run, and it’s still a phenomenally successful company,” says Kevin Werbach, a legal studies and business ethics professor at Wharton. In the meantime, the iPhone is coming off a strong upgrade cycle, the iPad has lost momentum, and the Apple Watch, while successful to some degree, hasn’t moved the needle as significantly as many past new products. Moreover, it’s unlikely that the company can come up with a new hit product that will rapidly improve sales immediately. It was the first such drop since 1998 and, coupled with comments by activist investor Carl Icahn that he has dumped his shares in the company, it accelerated worries about how Apple will deliver the strong future growth that investors have come to expect.Ĭoming off more than a decade of blockbuster products, Apple – the most valuable company in the world based on market capitalization - has become so large that Wharton experts say it is now confronting the law of large numbers, which suggests that its high earnings and growth in share price will eventually slow.Īt this point, what Apple needs is its next iPhone – but Wharton experts caution that it will take more than moonshots to cement robust future growth for the company. Apple’s disappointing second quarter earnings – including the first-ever drop in sales for the iPhone – sent the company’s stock tumbling for eight consecutive trading sessions.

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