Apple says sales fell in the first quarter

Apple says sales fell in the first quarter

Apple has just published its financial results for Q1 2019, which is the company's holiday quarter.

But is Apple falling victim to its own famed reality distortion field?Credit: ShutterstockCertainly, iPhone sales for the three months ended December 29, 2019 look as grim as when Apple warned that phone sales had slowed down earlier this month.

Apple on Tuesday said its revenue fell 5 percent in the first quarter, compared with $88.3 billion a year earlier.

However, the firm's shares gained nearly 4% in after-hours trade on Tuesday, as the firm proved more resilient than feared.

"While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter's results demonstrate that the underlying strength of our business runs deep and wide", said Apple CEO Tim Cook.

Investors reacted positively, elevating Apple's stock by more than 4 percent to $160.40 in extended trading after the report came out. That unexpected move raised suspicions that Apple was trying to hide a forthcoming slump in iPhone sales - fears that were realized during the holiday season. "We returned over $13 billion to our investors during the quarter through dividends and share repurchases".

Currency exchange rates were a big culprit, particularly with Apple's China business.

He said Apple is rethinking how it prices the iPhone outside the United States after largely setting the price in US dollars, which made the phones more expensive in local currencies. He didn't break down the base by model, but the company did confirm that the iPhone XR was the most popular, followed by the XS Max and the regular XS. "Now, in an unbundled world, it's much more than that". Cook said China's economic weakness hurt iPhone sales there.

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Cook conceded that many Apple users are "holding onto their older iPhones a bit longer than in the past", which contributed to lower iPhone demand.

There's some good news in that for Apple, Cook pointed out. It said it now has 1.4 billion active devices, an increase of 100 million from past year, and that 900 million of those are iPhones.

Another important source of income is the surging market for app downloads, where Apple gets 30 percent of the action.

Apple is likely to face questions on whether it boosted prices too far, lifting its newest handsets to $1,000 or more, in a market that is seeing tougher competition.

In guidance for the current March quarter, Apple told analysts to expect $55 billion to $59 billion in revenue.

Apple can take some comfort that other business segments are picking up some of the slack from the iPhone sales slump. For nearly any other company but Apple, this would be an impressive number.

"This is not "the fall of Apple" - it's just the shift of smartphones to boring maturity, as we look for what's next", Benedict Evans of the investment firm Andreessen Horowitz said in a recent blog post. Apple Pay has been steadily adding to the roster of businesses that let people tap handsets to consummate transactions. As iPhone sales failed to reach Apple's expectations during the holidays, the company turned to trade-in programs aimed at helping reduce the upfront cost of the iPhone.

Apple really isn't selling as many iPhones.

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