• by Thom Forbes  @tforbes, April 27, 2016

With iPhone sales slipping 16% year-on-year and quarterly revenue declining for the first time in 13 years, Apple shares tumbled below $100 in after-hours trading following its release of even-worse-than-expected second quarter 2016 results. Incremental improvements to the devices and the end of carriers’ subsidies, which provide the bulk of Apple’s revenue, is causing people to hold on to their old devices longer. Oh, yeah, then there’s China.

With year-on-year sales slipping 26%, from $16.8 billion to $12.5 billion, “the growth Apple experienced in China over the past five years will likely elude it over the next five,” writes Josh Horowitz for Quartz. “Not because people no longer want iPhones, but because the most obvious opportunities for growth have already been seized.”

There … and everywhere, some say.

“Apple missed by a mile,” Matt Krantz tells us in USA Today, “fanning concerns the world has finally reached a saturation point with smartphones.”

The stock was down 8% in after-hours trading yesterday and has fallen nearly 20% over the last 12 months, the BBC reports.

“There’s no question that Apple’s best days are behind it,” Bernstein analyst Toni Sacconaghi tells the New York Times’ Vindu Goel. “The company grew at astronomical rates, and it’s now so big that its ability to grow at those rates doesn’t exist anymore.” 

But, Goel informs us further down in the story, Apple CEO Tim Cook does not see it that way. He “described the decline as a ‘pause,’ not a fundamental change in the company’s business,” in an analyst’s call. “This, too, shall pass,” Cook said. “The future of Apple is very bright.”

Seeking Alpha’s transcript of the entire call can be read here.

The stormy results didn’t come out of nowhere, of course, but they are decidedly worse than most observers predicted. 

“Stock analysts had expected the company to post a 3% sales decline for the fiscal year ending in September,” writes John Shinal in another piece for USA Today. “Given the company's habit of beating conservative forecasts, that had been enough to stave off the bears and keep Apple stock flat this year, after it recovered some of its losses that sent it into a bear market late last year.”

Unit sales of the iPad were down almost 19% — although it’s “still doing well when compared to other tablets — and Mac unit sales slipped 12%, Andrew Cunningham reports for Ars Technica.

Still, writes Mark Rogowsky in a contribution to Forbes, “the 51.2 million iPhones the company sold last quarter is the fourth highest total ever posted.” He goes on to suggest that growth-obsessed investors are missing the big picture. And, citing [Jackdaw Research principal analyst] Jan Dawson’s “more sober” analysis “than what comes out of the finance industry,” he points out that “that iPhone sales are mostly on a trend that dates back several years. It was the mind-blowing success of [the larger] iPhone 6 that sent iPhone into the stratosphere; with 6s things are simply more earthbound.”

But wait, there’s more.

“Are there reasons to be optimistic about Apple? Absolutely,” says Alex Fitzpatrick in Time. “Let’s remember that the company still pulled in $50.6 billion in revenues for the quarter, which is, well, a lot of money. There’s also 20% growth in the all-important ‘Services’ category, which includes revenue from offerings like movie rentals and data storage.”

And, as Cook pointed out in the opening remarks of his earnings call, “We added a huge number of Android switchers and new-to-Mac customers” — more, in fact, than ever in a six-month period. Other positive spins include “a recent Kantar survey of U.S. smartphone purchasers indicated a 95% iPhone loyalty rate, the highest ever measured for any smartphone” and 58% of the global market is still ripe for that first device.

What about the first-generation Watch, Apple’s more recent bid for another breakthrough product?

“It quickly became a billion-dollar business, but so far hasn't shown the kind of mainstream appeal that made the iPod, MacBook, and iPhone such massive sellers,” writes Ben Popper for The Verge. “The details of Watch sales are still lumped in with ‘Other Products,’ and that was the worst performing piece of Apple's business this quarter.”

But as Daisuke Wakabayashi pointed out in the Wall Street Journal earlier this week, Apple “sold twice as many Watches as iPhones in each device’s debut year” according to analysts’ estimates.

Adam Grossman, a creator of the weather app Dark Sky, tells Wakabayashi: “Most of the greatness that is going to come through the Apple Watch is coming in the future. Six years from now, it’s going to be weird not to have a smartwatch.”

So pick your ending: “blue skies ahead” or “time will tell.”