Apple’s bottom line suffered as sales of its iPhone plummeted during the fiscal third quarter, dropping nearly 12 percent from a year ago as overall profitability for the company also took a hit during the period.
The results, which were released on Tuesday, represent a continued decline for the mighty iPhone, which still accounts for almost half of Apple’s total revenue. iPhone sales have been falling for three consecutive quarters as the company contends with multiple headwinds, including market saturation, a slower Chinese economy, and smartphone competition.
Apple reported iPhone sales of $26 billion for the recently ended quarter, down 12 percent from $29.5 billion in the year-ago period. For the quarter, Apple’s net income dropped 13 percent to $10 billion.
The company also saw sales in China decline for the period, falling 4 percent to $9.2 billion. For the first three quarters of the fiscal year, Apple’s China revenues are down 20 percent from last year.
President Donald Trump met with Apple CEO Tim Cook in June to discuss tariffs with China. Tariffs would significantly impact Apple, which depends on the country for close to 20 percent of its worldwide revenue.
On Tuesday, Apple investors shrugged off the less-than-stellar quarterly results, with shares rising in after-hours trading due to the company’s earnings per share, which beat analyst expectations.
As its consumer hardware sales drop or stagnate, the Silicon Valley giant has been trying to diversify its revenue base into the entertainment sphere. Apple is launching a new streaming service, called Apple TV+, which is positioned as a competitor to Netflix.
Apple is expected to spend $1 billion on new TV shows and movies, and is enlisting A-list talent like Steven Spielberg, J.J. Abrams, Reese Witherspoon and Jason Momoa.
Apple experienced a major public relations embarrassment this week following a report that company workers were able to eavesdrop on consumers via the Siri digital voice assistant. The report noted that Apple contractors around the world regularly heard people having sex, discussing confidential medical and legal matters, and even committing crimes such as drug deals.