While Apple Inc had reported to have sold more iPhones than Wall Street anticipated, sales for the product was still a prolonged slump that has weighed on Apple’s total revenue by 14.6% in the fiscal third quarter ended June 25.

The tech gargantuan had projected its revenue in the current period would beat several analysts’ estimates, putting out fiery anxiety that demand for iPhones had reached its doom.

Apple posted its quarterly earnings of $7.8 billion, down 27%. Its revenue of $42.36 billion surpasses average estimates of $42.09 billion.

Research firm FactSet StreetAccount cited that Apple Inc, the world’s most valuable publicly traded firm, has reported to have sold 40.4 million iPhones in the quarter, lower 15% from the same period in 2015 but hovered slightly above the consensus forecast of 40.02 million.


Apple decreased inventory channel inventory by $3.6 billion, topping the forecasted $2 billion reduction. Chief Financial Officer Luca Maestri said this meant sales were better than they seemed. He added that customer demand “was better that what is implied in our [expected] results and better than we had anticipated.”

Maestri said in an interview that Apple’s performance had beaten his expectations in a quarter, dragged down by rough forex rates and difficult comparisons with strong iPhone 6 sales from 2015.

Macbook sales fell, along with the sales for the company’s “Other” product category, including the Apple TV and Apple Watch.

Overall, Apple made less total revenue, booked a smaller profit compared to the same quarter in 2015. Its once-massive cash pile shrank, smaller than it was three months ago.

The only department of the business that continues to firmly surge does not even involve gadgets: the services segment.  The division, which includes iTunes, iCloud, Apple Pay, and Apple Music, reported yet another strong quarter, revenue higher 19% compared to last year. Apple’s services department is ranked as the company’s second largest business, sitting right below the iPhone for the first time in the second quarter.

China as a “major letdown”

Patrick Moorhead, analyst at Moor Insights & Strategy, called China as a “major letdown” and said, “Samsung and Huawei are much more competitive now than a year ago and the Chinese economy is not doing well at all.”

Sales in China nosedived 33.1%.

iPhone demand has faded in China due to its economic uncertainty, and has slowed in more mature markets as people tend to hold on to their phones longer. The slump has sparked worries about whether Apple can continue to deliver earnings as Wall Street’s expected level.


AAPL Stock Value

Nonetheless, in after-hours trading, Apple shares climbed 7% due to investors seeing the decline not as bad as they expected. Wednesday’s earnings results have pictured Apple as a value stock.

The technology firm has returned more money to shareholders via buybacks and dividends during the quarter than it made, thus the cash pile shrinkage. Apple reported to have returned $177 billion of the $250 billion it projected to give back to its shareholders.

Another iPhone is set to be unveiled in August, and talks comprise that the firm is working on other endeavors—possibly reviving growth for Apple.

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