Picture: REUTERS
Customers gather outside an Apple store in Munich. Picture: REUTERS

SAN FRANCISCO — Apple fell in early trading after forecasting a sales decline for the first time in more than a decade, adding to evidence that the market for smartphones is becoming saturated and that expansion in China is no longer enough to maintain the company’s unprecedented run of growth.

Revenue in the first three months of the year would be $50bn-$53bn, Apple said on Tuesday, the first quarterly drop since 2003 and below analysts’ estimates of $55.5bn. That follows a quarter in which overall sales and iPhone shipments fell short of projections, reinforcing concerns that Apple was reaching the limits of iPhone growth and that a push in China would not make up for a slowdown in the rest of the world — a sentiment that has fuelled a stock slide of 20% in the past six months.

While Apple remains immensely profitable — generating a record $18.4bn in net income on sales of $75.9bn in the December quarter — it is no longer benefiting as much from the rapid adoption of smartphones throughout the world.

Apple CEO Tim Cook has expanded in China and released new services and products such as Apple Watch to help broaden the business, but the company’s dependence on the iPhone leaves it vulnerable to any deceleration in demand.

"They have other products, and have the potential to launch other products, but the hole left from an iPhone slowdown is too big to fill," said Abhey Lamba, an analyst at Mizuho Securities USA.

Apple shares dropped 4% in early trading in New York to $96.

In addition to the iPhone, Apple’s other product lines are also stalling. iPad purchases continued to decline, falling to 16.1-million tablets during the quarter, compared with a projection of 17.3-million. Mac sales fell to 5.31-million, compared with the 5.8-million estimated.