Before you begin to dismiss Apple’s prospects in light of its tepid quarterly financials for the first quarter of fiscal year 2016, and an expected drop in iPhone sales for the current quarter, there are some amazing numbers to be found. First and foremost is the fact that Apple has activated over one billion devices so far. So the mind boggles. That leaves loads of customers who can upgrade existing gear, or buy other Apple products and services. That installed base has to be the envy of the industry because it strictly represents paying customers for a single company.

In contrast, there may be more Android handsets out there, but Google’s primary source of earnings is targeted ads. Yes, a lot of Android apps are being downloaded, but a high proportion are free. Actual hardware sales are spread among a number of manufacturers, and few of them earn much in the way of profits.

As I said, there’s a huge upside to what Apple’s is delivering despite the disappointing quarterly numbers.

Meantime, speculation about Apple’s first quarter financials for its 2016 fiscal year was all over the place with an emphasis on the negative. It also appears as if the bears had it, since the iPhone’s sales totaled 74.8 million, an increase was a mere 0.4% over the same quarter last year, the lowest increase since it first appeared in 2007. That’s about a million units less than the conservative projections of how Apple would do.

But the average sale price was $690, up $3 over last year. That’s actually better than predicted. Skeptics assumed sales had moved towards the lower-end models, such as last year’s iPhone 6, since the perceived changes in the new models were’t considered to be extensive.

Still, revenue in China rose 14% for the quarter, though Apple is seeing the economic headwinds in Greater China. This is quite obvious in the remarks CFO Luca Maestri delivered for a Reuters interview, “As we move into the March quarter it’s becoming more apparent that there are some signs of economic softness. We are starting to see something that we have not seen before.”

In other words, Apple is not accustomed to seeing its growth slow down after so many years of walking on water.

Still, there were record numbers to be found. Revenue totaled $75.9 billion for the quarter, with a net income of $18.4 billion, or $3.28 per diluted share. That’s a tad ahead of last year, where revenue totaled $74.6 billion and a net income of $18 billion, or $3.06 per diluted share.

Industry analysts had projected revenue of $76.5 billon, or $3.22 per diluted share, so it was half and half in terms of meeting expectations. A record, yes, but as you see it was barely ahead of last year, which represents a serious slowdown in the company’s growth curve. As you might expect, Apple executives offered plenty of corporate spin to make it seem as if everything was so much better than the numbers show.

Meanwhile, the financial headwinds are growing worse for the second quarter, where Apple projects revenue between $50 billion and $53 billion. So in this case, it does appear that the cutbacks reported in the supply chain were right on the money. Cook agrees that there will be a decline of iPhone sales in the quarter, claiming that the comparable quarter last year included catchup sales because of inventory problems. Regardless, this would be the first time iPhone sales will dip.

In short, there will be no excuse that you can’t take a few supply chain metrics and get an accurate indication of total revenue. There was just too much reliable information not to take it seriously. Perhaps the industry analysts who got it wrong before have learned, from experience, which supply chain sources to use in estimating actual sales.

Now contrary to expectations about a Mac sales improvement, total sales were actually down slightly. Sales totaled 5.3 million units, a decrease of four percent over last year. Still, Apple continues to gain ground against PCs, where sales losses were usually worse.

Despite the release of the iPad Pro, which arrived quite late in the last quarter, iPad sales still fell 25% to 16.1 million units. There’s no indication when, if ever, sales will improve. But it may well take time for the iPad Pro’s potential to be realized.

Without mentioning numbers, CEO Tim Cook talked of record sales for the Apple Watch and the Apple TV. But without any actual totals to go by — and there will be unofficial estimates — true comparisons aren’t possible. Both are listed in the “other products” category in Apple’s financials, where sales were up 63% year-over-year. So that might give a clue.

Obviously, the financial analysts participate in the quarterly conference calls aren’t inclined to ask very many tough questions, or any. Most of the questions during this quarter’s session were fairly technical about business operations and results.

On a positive note, Cook said he was “blown away” by the number of Android switchers to the iPhone during the last quarter. He also pointed to Apple’s share in developing countries and the huge opportunities. But it may take until the June quarter — or later — for sales to resume the upward curve. Or maybe not even then.

This article was posted on Wednesday, January 27th, 2016 at 12:00 AM and is filed under News and tagged with: Apple, Apple Tv, Apple Watch, iPad, iPad Pro, Iphone, Luca Maestri, Mac, Reuters, Tim Cook.