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April 30, 2019

Apple's iPhone sales fall 17% from prior year

By CNN BUSINESS

At one time, the staggering success of the iPhone helped catapult Apple to become the world's most valuable company. Now, its smartphone sales are in a tailspin and dragging down Apple's business.

Apple said Tuesday that its revenue for the first three months of 2019 declined 5% from the year prior to $58 billion as it grappled with sluggish smartphone demand. iPhone sales for the period fell 17% from the year prior.

However, Apple offset some of those declines with continued growth in its digital services business. The services segment, which includes products such as Apple Pay, Apple Care and Apple Music, generated a record $11.5 billion in revenue during the quarter, a 16% increase from a year ago. It is currently Apple's second biggest revenue driver, ahead of the Mac and iPad.

The growth in services helped push Apple's overall revenue above Wall Street's muted expectations. Apple also appeased investors by announcing plans to repurchase another $75 billion worth of shares and increasing its dividend. Apple stock rose 5% in after-hours trading Tuesday following the earnings report.

For years, Apple's iPhone business appeared to defy gravity as the company managed to sell more devices and gradually charge more for them. But that narrative was shattered at the beginning of this year when the company warned investors that iPhone sales had taken a hit from a slowdown in China as well as longer smartphone upgrade cycles.

The company has faced stiff competition in China from competitors like Huawei and Xiaomi, which offer cheaper smartphones at a time when Apple is embracing phones with four-figure price tags. Apple recently reduced the price of some of its products, including the iPhone XS and XR, by nearly 6% in some instances.

Apple posted revenue of $10.2 billion in China for the first three months of the year, down from $13 billion in the same period a year ago.

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