Apple shares floundered on Thursday on news of a sharp drop in sales of iPhones, which are at the heart of the tech titan’s money-generating engine.
Apple’s earnings fell 7 percent to $ 12.7 billion in the quarter that recently ended, the Silicon Valley-based behemoth said in its earnings release.
The California tech giant’s total revenue rose from last year’s level to $ 64.7 billion in the fourth fiscal quarter, but revenue from iPhone sales, Apple’s main revenue driver, fell 20 percent with compared to the previous year, which disturbed investors.
The company’s stock price plummeted more than four percent in after-hours trading.
“The iPhone is the source of income and the engine of almost all the complementary services that Apple has,” said analyst Patrick Moorhead of Moor Insights and Strategy.
“Everything is tied to that.”
Apple has prioritized selling apps, games, subscriptions, and music to iPhone users in recent years to break its dependence on selling phones.
From Apple TV and the App Store to Apple Watch and AirPod headphones, the company’s other offerings are aimed at iPhone users, Moorhead noted.
“I expect Apple in the next quarter to have a big increase due to the new models, and also the financing or new phones with monthly plans,” Moorhead said.
The newly launched iPhone 12 models include some designed for ultra-fast 5G networks.
“Apple capped a fiscal year defined by innovation in the face of adversity with a record for the September quarter, led by all-time records for Mac and Services,” Apple Chief Executive Officer Tim Cook said in a statement.
Cook added that the early response to the company’s first 5G-enabled iPhone lineup has been “tremendously positive.”