(Bloomberg) — Apple Inc. fell the most in five months 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.

Apple has been adding tools such as the Apple Music streaming service and Apple Pay digital payments to augment its business, but the challenge is generating enough revenue from new products to move the needle for a company of Apple’s size. Abhey Lamba, an analyst at Mizuho Securities USA, said that while Apple makes about $300 for each iPhone sold, it takes about 60,000 transactions via Apple Pay to make $100.

Apple didn’t disclose sales for Apple Watch, which isn’t yet a breakout hit with customers in the way that iPhone or iPad were.

Maestri said Apple’s services business — which includes music streaming, the App Store and Apple Pay — is growing rapidly and will help make up for slowdowns in other areas. He said investors don’t yet appreciate that piece of the company’s business. The company generated $31 billion in services revenue in fiscal 2015, and in the past 90 days about 1 billion Apple devices connected to them, he said.

Consumers downloaded 5.5 billon apps for Apple’s App Store in Q4 2015 (October through December 2015) generating $3.3 billion in revenue for Apple, according to mobile app marketing company Sensor Tower.

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“It’s a clear point that we’re going to make to anybody who is willing to listen,” he said. “The stock price doesn’t reflect the true value of our company.”

Maestri contested those who say Apple’s business has peaked. “We see a number of opportunities to grow.”

Revenue in the first three months of the year will be $50 billion to $53 billion, Apple said Tuesday, the first quarterly drop since 2003 and below analysts’ estimates for $55.5 billion. That follows a holiday quarter in which overall sales and iPhone shipments fell short of projections, reinforcing concerns that Apple is reaching the limits of iPhone growth and that a push in China won’t make up for a slowdown in the rest of the world — a sentiment that’s fueled a stock slide of 20% in the past six months.

While Apple remains immensely profitable — generating a record $18.4 billion in net income on sales of $75.9 billion in the December quarter — it’s no longer benefiting as much from the rapid adoption of smartphones around the world. Mobile-phone rival Samsung Electronics Co. also recently reported weaker- than-expected results. Apple Chief Executive Officer 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.

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“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 Mizuho’s Lamba. “Its future is whatever is happening in the smartphone space.”

Apple shares dropped as much as 5.3% to $94.66 in New York for their biggest intraday decline since Aug. 24.

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 holiday quarter, compared with a projection of 17.3 million. Mac sales fell to 5.31 million, compared with the 5.8 million estimated. IPhone sales rose to 74.8 million units, compared with the average 75 million predicted by analysts.

Luca Maestri, Apple’s chief financial officer, said the company is feeling the effects of a “very different” economic environment around the world. Apple is beginning to see “softness” in China, particularly in Hong Kong, he said.

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“You need to take into account the business opportunities that we have, but also the realities of an economic environment that is not ideal right now,” he said. Brazil, Canada, Japan and Russia also are showing signs of slowing down, he said. “There are a lot of economies around the world that are in recession.”

Tough Comparisons

Apple got a boost last quarter from an earlier release in China of the latest iPhone models — the 6S and 6S Plus — but the trade-off is that sales in the current period may take a hit. Overall sales in greater China rose 14% to $18.4 billion last quarter, and Cook said the company would continue to invest there despite an economic slowdown.

“We remain very bullish on China,” Cook said. “I don’t subscribe to the doom-and-gloom predictions.”

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Gross margin, a measure of profitability, was little changed at 40% in the December quarter, and will be 39% to 39.5% in the current period, Apple said. Cash and equivalents rose to about $216 billion in the December quarter.

While Apple beat its record for most profitable quarter for a U.S. company, investors are looking ahead to the rest of the year, Forrest said.

“We’re a fickle lot, the investor class, and we may like your product,” she said, “but if you’re not making more money next year we’re kicking you to the lot.”

Apple largely created the global smartphone market with the 2007 debut of the iPhone, and as customers have adopted the technology around the world no company has profited more. But the market is slowing down, making growth harder to find. Research firm IDC forecast smartphone sales last year would rise by less than 10% for the first time ever. Besides Apple, companies ranging from Samsung to China’s Xiaomi Corp. have felt the impact.

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Exchange Rate

Apple said it’s also being hurt by the strength of the U.S. dollar against foreign currencies, which is trimming revenue. What would have been $100 in sales in the fourth quarter of 2014 is today worth only $85 because of the shift in currency- exchange rates, Apple said in a statement.

For the first quarter, which ended in December, the Cupertino, California-based company reported per-share net income of $3.28. Analysts on average had projected earnings of $3.23 a share on sales of $76.5 billion, according to data compiled by Bloomberg.

The results step up pressure on the company to pack its next iPhone update with new features that will prompt customers to upgrade. IPhone sales exploded after the release of the larger-screen models in 2014, but the latest versions released in September didn’t include many distinctive changes — and sales plateaued.

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“The question is whether there has been a secular slowdown of people buying smartphones, said Kim Forrest, a senior equity analyst at Fort Pitt Capital Group, which has about $1.7 billion under management. “The second question is whether customers are still buying iPhones at the same rate in China.”

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