mcloudyn.png
Wednesday July 24th, 2019 5:41AM

Apple opens new chapter amid weakening iPhone demand

By The Associated Press
Related Articles
  Contact Editor

SAN FRANCISCO (AP) — Apple hoped to offset slowing demand for iPhones by raising the prices of its most important product, but that strategy seems to have backfired after sales sagged during the holiday shopping season.

Results released Tuesday revealed the magnitude of the iPhone slump — a 15 percent drop in revenue from the previous year. That decline in Apple's most profitable product caused Apple's total earnings for the October-December quarter to dip slightly to $20 billion.

Now, CEO Tim Cook is grappling with his toughest challenge since replacing co-founder Steve Jobs 7 ½ years ago. Even as he tries to boost iPhone sales, Cook also must prove that Apple can still thrive even if demand doesn't rebound.

It figures to be an uphill battle, given Apple's stock has lost one-third of its value in less than four months, erasing about $370 billion in shareholder wealth.

Cook rattled Wall Street in early January by disclosing the company had missed its own revenue projections for the first time in 15 years. The last time that happened, the iPod was just beginning to transform Apple.

"This is the defining moment for Cook," said Wedbush Securities analyst Daniel Ives. "He has lost some credibility on Wall Street, so now he will have to do some handholding as the company enters this next chapter."

The results for the October-December period were slightly above the expectations analysts lowered after Cook's Jan. 2 warning. Besides the profit decline, Apple's revenue fell 5 percent from the prior year to $84 billion.

It marked the first time in more than two years that Apple's quarterly revenue has dropped from the past year. The erosion was caused by the decline of the iPhone, whose sales plunged to $52 billion, down by more than $9 billion from the previous year.

The past quarter's letdown intensified the focus on Apple's forecast for the opening three months of the year as investors try to get a better grasp on iPhone sales until the next models are released in autumn.

Apple predicted its revenue for the January-March period will range from $55 billion to $59 billion. Analysts surveyed by FactSet had been anticipating revenue of about $59 billion.

Investors liked what they read and heard, helping Apple's stock recoup some of their recent losses. The stock gained nearly 6 percent to $163.50 in extended trading after the report came out.

"We wouldn't change our position with anyone's," Cook reassured analysts during a conference call reviewing the past quarter and the upcoming months.

The company didn't forecast how many iPhones it will sell, something Apple has done since the product first hit the market in 2007 and transformed society, as well as technology.

Apple is no longer disclosing how many iPhones it shipped after the quarter is completed, a change that Cook announced in November. That unexpected move raised suspicions that Apple was trying to conceal a forthcoming slump in iPhone sales — fears that were realized during the holiday season.

Cook traces most of Apple's iPhone problems to a weakening economy in China, the company's second biggest market behind the U.S. The company is also facing tougher competition in China, where homegrown companies such as Huawei and Xiaomi have been winning over consumers in that country with smartphones that have many of the same features as iPhones at lower prices.

Although a trade war started by President Donald Trump last year has hurt China and potentially caused some consumers there to boycott U.S. products, many analysts believe the iPhone's malaise stems from other issues too.

Among them are higher prices — Apple's most expensive iPhone now costs $1,350 — for models that aren't that much better than the previous generation, giving consumers little incentive to stop using the device they already own until it wears out. Apple also gave old iPhones new life last by offering to replace aging batteries for $29, a 70 percent discount.

"The upgrade cycle has extended, there is no doubt about that," Cook conceded.

Apple is banking that investors will realize the company can still reap huge profits by selling various services on the 1.4 billion devices running on its software.

That's one reason why Cook has been touting the robust growth of Apple's division that collects commissions from paid apps, processes payments, and sells hardware warranty plans and music streaming subscriptions. Apple Music now has more than 50 million subscribers, second to Spotify's 87 million streaming subscribers through September.

Apple is also preparing to launch a video streaming service to compete against Netflix, though Cook said he wasn't ready to provide details Tuesday.

The company's services revenue in the past quarter climbed 19 percent from the prior year to $10.9 billion — more than any other category besides the iPhone.

  • Associated Categories: Associated Press (AP), AP National News, AP Online National News, Top General short headlines, AP Business, AP Business - Corporate News, AP Business - Personal Finance, AP Technology News
© Copyright 2019 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
'Empire' cast member alleges homophobic attack in Chicago
Chicago police have opened a hate crime investigation after a cast member of the television show "Empire" alleged he was attacked by two men who also shouted racial and homophobic slurs
8:07PM ( 12 minutes ago )
US launches plan for asylum seekers to wait in Mexico
Trump administration launches effort to make asylum seekers wait in Mexico while cases are decided
7:58PM ( 22 minutes ago )
Campaign cash paid Trump foe's legal bills after #MeToo fall
AP finds New York Attorney General Eric Schneiderman used nearly $340,000 in campaign cash to pay a high-powered Manhattan law firm to defend him after he resigned amid abuse allegations
7:40PM ( 39 minutes ago )
Associated Press (AP)
Report: Powerful Illinois speaker Madigan recorded in probe
A Chicago newspaper is reporting that a federal affidavit says the FBI secretly recorded Illinois' powerful House speaker in 2014 discussing a hotel development project
6:42PM ( 1 hour ago )
Apple opens new chapter amid weakening iPhone demand
Apple CEO Tim Cook confronts toughest challenge yet as company grapples with slowing iPhone demand
6:41PM ( 1 hour ago )
Federal investigators win access to limo in deadly crash
Federal investigators will finally be able to perform a hands-on inspection of the limousine involved in a crash that killed 20 people in October, ending a long public impasse with the criminal prosecutor
6:38PM ( 1 hour ago )
AP Business
Arrests in Brazil dam disaster, dead fish wash up downstream
Brazilian officials have arrested five people in connection with a dam collapse, while the death toll has risen to at least 84 and the carcasses of fish are floating in river downstream that an indigenous community depends on for food and water
5:42PM ( 2 hours ago )
US stocks end mixed as Wall Street assesses earnings
Stocks posted an uneven finish on Wall Street Tuesday, handing the S&P 500 index its second decline in a row
5:32PM ( 2 hours ago )
Apple opens new chapter as iPhone sales fall and stock sinks
Apple CEO Tim Cook confronts toughest challenge yet as company grapples with slowing iPhone demand
5:02PM ( 3 hours ago )
AP Business - Corporate News
GOP senator pledges insulin probe as Congress holds hearings
Senate committee opens hearings on high U.S. prescription drug prices and how the government might put the brakes on them. Pharmaceutical industry says price spikes of recent years have stabilized.
2:33PM ( 5 hours ago )
Millennial Money: 5 keys to picture-perfect TV buying
Super Bowl season is an excellent time to purchase a new TV, as long as you have room in your home and budget
10:56AM ( 9 hours ago )
Insulin probe on deck as Congress opens drug price hearings
Senate committee opens hearings on high U.S. prescription drug prices and how the government might put the brakes on them. Pharmaceutical industry says price spikes of recent years have stabilized.
10:26AM ( 9 hours ago )
AP Business - Personal Finance
China-US row over tech giant Huawei overshadows trade talks
China calls on Washington to 'stop the unreasonable crackdown' on Huawei following tech giant's indictment; company denies accusations
5:19PM ( 3 hours ago )
Apple to fix FaceTime bug that allows eavesdropping
Apple has made the group chat function in FaceTime unavailable after users said there was a bug that could allow callers to activate another user's microphone remotely
5:06PM ( 3 hours ago )
China tells US to stop 'unreasonable crackdown' on Huawei
China calls on Washington to 'stop the unreasonable crackdown' on Huawei following tech giant's indictment; company denies accusations
10:02AM ( 10 hours ago )
AP Technology News
'Empire' cast member alleges homophobic attack in Chicago
Chicago police have opened a hate crime investigation after a cast member of the television show "Empire" alleged he was attacked by two men who also shouted racial and homophobic slurs
8:07PM ( 12 minutes ago )
US launches plan for asylum seekers to wait in Mexico
Trump administration launches effort to make asylum seekers wait in Mexico while cases are decided
7:58PM ( 22 minutes ago )
Campaign cash paid Trump foe's legal bills after #MeToo fall
AP finds New York Attorney General Eric Schneiderman used nearly $340,000 in campaign cash to pay a high-powered Manhattan law firm to defend him after he resigned amid abuse allegations
7:40PM ( 39 minutes ago )
British Jews apply for German nationality as Brexit looms
Brexit is making many Europeans secure citizenship in other EU states, including Jews whose ancestors fled Germany during Nazi rule and are now re-examining their long-held beliefs about the country
7:34PM ( 46 minutes ago )
Court bars Venezuela opposition leader from leaving nation
Venezuela's Supreme Court has barred opposition leader Juan Guaido from leaving the country in a move certain to heighten tensions
7:31PM ( 48 minutes ago )