Apple iPhone in Decline?

Apple’s iPhone business is in decline — and there appears to be no end in sight. Apple said Tuesday that iPhone revenue for the all-important holiday quarter fell 15% from the same period a year ago, a steep drop for a product line whose sales growth defied gravity for years. The shrinking iPhone sales led to Apple’s first holiday quarter revenue decline since 2000. Apple posted revenue of $84.3 billion for the quarter, slightly better than it had warned investors to expect earlier this month. But it nonetheless represented a 5% decline from the same quarter a year ago.

On a conference call with analysts Tuesday about the earnings report, Apple CEO Tim Cook chalked up the iPhone sales decline to a mix of factors, including foreign exchange rates, a popular battery replacement program and the decrease in carrier smartphone subsidies. Cook also noted “more severe” macroeconomic conditions in China, once one of Apple’s most promising new markets, reiterating a point made in the stark warning to investors this month.

Aside from the setbacks to the business, Apple is also scrambling to fix a technical glitch in its FaceTime video-chat system that let callers eavesdrop on users of iPhones, iPads and Macs. The bug, which was exposed on social media Monday, is an embarrassment to a company that has touted its commitment to privacy. Amid the turmoil, Mr. Cook projected confidence on the earnings call. “Macroeconomic factors will come and go, but we see great upside in continuing to focus on the things that we can control,” he said.

The CEO, who is usually reluctant to discuss future products, said the company has a strong pipeline of products and services with new announcements slated for later this year. “Apple innovates like no other company in the world and we are not taking our foot off the gas,” Mr. Cook said. Apple’s shares fell 1% during the day but jumped nearly 6% to $163.50 in after-hours trading. The stock is down about 30% since hitting a peak in early October, and the company has since ceded its position as the world’s most valuable company to both Inc. and Microsoft Corp.


Todd “Bubba” Horwitz