Shares Tank As Apple Reveals Component Problems With iPhone 7
It was supposed to take Apple to giddy heights, but the iPhone X could end up being one of Apple’s worst ever smartphones.
Even attempts to nobble iPhone 7 devices with a software update, that caused problems for owners to the extent that two major US federal Government departments are now investigating Apple’s actions. Some analysts claim that the issue was more about driving sales of their new iPhone 8.
Compounding the US Companies problems Apple now claims that owners of iPhone 7 smartphones may experience a component failure that makes it appear the phone isn’t connected to a carrier network even when service is available. Apple said it would repair affected devices at no charge.
The company, which reported earnings on Friday didn’t make clear which component has malfunctioned which is not surprising as Apple often tries to “gloss over” issues that affect the brand or are related to component failures.
The issue is Apple’s fourth official iPhone-related replacement program since 2015. Apple previously offered free repairs for limited numbers of iPhone 5s camera issues, iPhone 6 Plus touchscreen problems, and iPhone 6s devices that would randomly shut down.
On Friday Apple’s first earnings report since the launch of the pricey iPhone, Apple reported lower-than-expected handset sales during the peak sales months running into and during the recent holiday break when most handsets are sold.
Chief Financial Officer Luca Maestri also forecast a decline in the average selling price of iPhones in the current quarter, suggesting the most-expensive models aren’t as popular.
The results are part of a broader malaise in the global smartphone industry. Shipments in the fourth quarter dropped 9 percent, year over year, the biggest decline in history, according to Strategy Analytics.
“The super cycle is dead,” Steven Milunovich, an analyst at UBS, wrote in a note to investors on Friday.
Apple shares fell as much as 4.1 percent Friday to $160.88, the biggest intraday decline in more than six months. The stock is down 4 percent so far, this year.
“The verdict is in: relative to expectations, the cycle is weak, and total iPhones sold are likely to be flat for the third straight year,” Toni Sacconaghi, an analyst at Sanford C. Bernstein, wrote in a note to investors. He downgraded the shares to market-perform and cut his price target to $170 from $195.