Apple Revenue and Profit Drop

Apple Inc. posted its first holiday-quarter decline in revenue and profit in over a decade and warned the slowdown in its core iPhone business and weakness in China has spilled into the latest period.

The Wall Street Journal reports the company’s revenue dropped 4.5% to $84.31 billion for the three months ended Dec. 29, while its profit fell slightly, to $19.97 billion. Apple has been stung at home by smartphone owners’ increasing reluctance to upgrade to pricier devices and by competition in China from lower-priced, feature-rich phones. Its iPhone sales fell 15% in the quarter.

Wall Street Journal Graphic

The underwhelming report on Tuesday extends one of Apple’s most tumultuous periods under Chief Executive Tim Cook. Its month began when he unexpectedly slashed Apple’s revenue forecast for the first time in more than 15 years, sparking investor fears about growth.

Aside from the setbacks to the business, Apple is also scrambling to fix a technical glitch in its FaceTime video-chat system that let callers eavesdrop on users of iPhones, iPads and Macs. The bug, which was exposed on social media Monday, is an embarrassment to a company that has touted its commitment to privacy.

The CEO, who is usually reluctant to discuss future products, said the company has a strong pipeline of products and services with new announcements slated for later this year. “Apple innovates like no other company in the world and we are not taking our foot off the gas,” Mr. Cook said.

Apple’s greatest challenges are twofold: Ignite sales of an iPhone business that makes up nearly two-thirds of its sales, and drive enough growth in smaller businesses such as services and wearables to offset a maturing smartphone market.

Customers have been reluctant to pay up for flagship iPhones that have risen in starting price by more than 50% in recent years to nearly $1,000. Demand for the iPhone XR, a lower-priced option released in October, has fallen short of the company’s expectations, forcing it to slash production.