Apple (Nasdaq: AAPL) has been struggling for a while now. It has just reported the third consecutive quarter of revenue decline. The results were weak primarily due to the saturated smart phone market that is causing a slowdown in iPhone sales.

Apple’s Financials

Apple’s fourth quarter revenues fell 9% over the year to $46.9 billion, falling short of the Street’s forecast of $47.03 billion. EPS of $1.67 was marginally ahead of the market’s projected earnings of $1.66 per share.

By segment, Apple’s iPhone revenues fell 13% over the year to $28.16 billion. iPad sales were flat over the year at $4.255 billion and Mac sales fell 17% to $5.74 billion. Services revenues grew 24% to $6.33 billion and revenues from other products, which include sales from Apple Watch and AppleTV, fell 22% to $2.37 billion.

During the quarter, iPhone sales fell 13% over the year to 45.5 million units. iPad sales fell 6% over the year to 9.27 million units and Mac sales fell 14% over the year to 4.89 million units.

By region, Apple’s revenues from the Americas fell 7% over the year $20.23 billion and sales from Europe grew 3% to $10.84 billion. Revenues from the Greater China region continued to fall and declined 30% to $8.79 billion. Revenues from Japan grew 10% to $4.32 billion and the rest of Asia Pacific declined 1% to $2.67 billion.

Apple ended the year with revenues falling 8% to $215.64 billion and an EPS of $8.35 compared with $9.28 a year ago.

For the current quarter, Apple forecast a return to growth with revenues of $76 billion-$78 billion and a gross profit of 38%-38.5%. The market was looking for revenues of $74.97 billion.

Apple’s Upgrades

At the end of September, Apple announced the release of iPhone 7. The recently reported quarter did not see a lot of uptick from the sales of the new phone, but Apple’s stock had climbed 10% on the announcement of the release. It was the strongest performance for the stock for the year so far. Apple did not divulge reports, but is confident that iPhone 7 is seeing strong performance and will deliver in the current quarter. Apple may also see some uptick in the phone sales due to the dismal performance of Samsung’s latest Galaxy Note 7. The bigger bulk of Samsung’s users are expected to migrate to other Android devices including Google’s Nexus 6P.

Earlier this year, many were expecting Apple Watch to save Apple’s future. But things don’t seem to have gone all well. According to an IDC report, global smartwatch shipments have fallen more than 50% over the year to 2.7 million units from 5.6 million units. Apple is still the market leader in the smartwatch segment, but IDC estimates that its shipments fell 72% over the year to 1.1 million units. Apple is addressing the problem by pivoting the watch to become more of a fitness tracker than an accessory for the iPhone.

The recently released Apple Watch Series 2 looks similar to the first release of the Apple Watch but comes with features such as being swim-proof up to 50 meters, GPS for tracking runs and walks. In fact, during the release of the Watch, Apple spoke more about its fitness tracking capabilities than the third party apps which were a focal point in the first release. The Watch does come with system improvements like a faster processor and a brighter screen for improved visibility in direct sunlight.

Within the Mac segment, Apple is also releasing the new MacBook Pro soon. The new Mac is expected to come with features such as a programmable touch-sensitive OLED display strip, and new connectivity options such as USB-C and new power peripherals in the form of Thunderbolt connections. Apple is expected to drop the older USB ports and the Magsafe power cord from the new MacBooks.

I am not too thrilled on Apple’s growth strategy relying on product upgrades. As I mentioned earlier, in the 5-Horse race in technology, Apple appears to be the weakest right now. Its product line-up needs major refurbishing. It should seriously evaluate my suggestion of buying out Netflix to leverage Netflix’s original blockbuster content line-up.

Apple’s stock is trading at $118.25 with a market capitalization of $637.2 billion. It touched a 52-week high of $123.82 in November last year and has recovered from the 52-week low of $89.47 it had fallen to in May.

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