Tim Cook Admits: iPhone’s Price Is A Factor Responsible For Lower Sales

January 30 23:00 2019

In its results, Apple said net sales of iPhones were down by $9 billion compared to the same quarter previous year, though net sales increased in other categories such as services, wearables and tablets. It’s forecasted to reach $14 billion by next year and I’ve little doubt Apple will fall short of that goal. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad”. The company on January 2 had warned of an underwhelming holiday quarter for iPhone sales, revising down its expected revenues from $89 billion to $84 billion.

The key number from today’s report was Apple’s fiscal second-quarter sales guidance of $55 billion to $59 billion. But what they really wanted to talk about – and what they did talk about at length – was services. And it all comes down to iPhone sales.

Apple has revealed its Q1 2019 financial results, announcing a quarterly revenue of $84.3 billion.

The stock closed down one per cent on the Nasdaq at US$154.68 but climbed in extended trading.

The company said it now has 360 million subscribers to both its own and third-party services, and set a goal to expand that to 500 million by the end of 2020.

To address this, Apple plans to link the price of its handsets to local currencies rather than the U.S. dollar. In addition, if we add the Apple Watch, iPad, iPod and Mac devices, the number of Apple devices now in use grows to a whopping 1,400 million. The company’s Wearables business, which includes the Apple Watch and AirPods, surged 50 per cent. “Actually, it was a small price difference in the United States compared to last year”.

Still, Apple needs to step up its game in its services business to compete with the likes of Amazon Prime, according to Saunders, who believes Cook & Co. should consider a large acquisition like Netflix. In the US, the owner of the company supplying screws was forced to put them in the back of his vehicle and deliver them to Apple just to try and keep pace with its orders. In other words, the company is attempting with services to avoid the bind that it now finds itself in, with its fortunes tied to one product alone.

“In our view, this is something to be corrected, not least because Apple is a costly company to run and it relies on strong revenue growth to drive up the bottom line”.

Sales of iPhones plunged 15 percent during the holiday quarter – and that’s great news on Wall Street. When pressed by an analyst on whether its gross margins might see some volatility, Maestri had to admit the answer was yes.

Apple may be forced to drop the prices its charges for some of its iPhones in a response to plummeting sales, the BBC is reporting.

Apple can take some comfort that other business segments are picking up some of the slack from the iPhone sales slump. The numbers will be a bit more hard to read. Analysts are closely watching the company’s services division and are relying on it to drive growth. As of right now, it doesn’t seem like Apple will be sharing that information.

That prediction is so far proving accurate, with Apple shares jumping in after-hours trade, lately up almost 6 percent.

Apple's iPhone revenue which not so long ago appeared to be rising inexorably is now officially in retreat with a 15% shortfall year-over-year

Tim Cook Admits: iPhone’s Price Is A Factor Responsible For Lower Sales
 
 
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