MORNING-05
Sales of the iPhone fell for the first time ever. Apple`s quarterly revenue
is down about thirteen percent. It dropped from fifty-eight billion dollars
to 50.6 billion.>
NORAH O`DONNELL: Apple is facing new questions after a slump in the sales. The tech giant`s revenue declined for the first time since 2003. Sales of the iPhone fell for the first time ever. Apple`s quarterly revenue is down about thirteen percent. It dropped from fifty-eight billion dollars to 50.6 billion. The company`s stock tumbled nearly eight percent in after-hours trading following Tuesday`s earnings report. Wall Street Journal financial editor Dennis Berman is here. Dennis, good morning.
DENNIS BERMAN (Wall Street Journal Financial Editor): Hi, great to see you.
NORAH O`DONNELL: Mild earthquake yesterday with these--
DENNIS BERMAN: A mild earthquake.
NORAH O`DONNELL: A mild earthquake yesterday. What`s behind it does it signal trouble for Apple?
DENNIS BERMAN: Well, trouble for Apple is, obviously, a relative term.
GAYLE KING: Yeah.
DENNIS BERMAN: It makes about ten billion dollars in the last quarter.
GAYLE KING: Right.
DENNIS BERMAN: Revenue of fifty billion dollars.
NORAH O`DONNELL: And, as the Journal points out, that`s more profits than Alphabet, Facebook, and Amazon combined.
DENNIS BERMAN: Really an-- an incredible sum. So it`s all relative. It had one of the greatest runs of profits at scale ever in the history of--
CHARLIE ROSE: American history.
DENNIS BERMAN: --in U.S. history--
GAYLE KING: Yeah.
DENNIS BERMAN: --or world history.
CHARLIE ROSE: Yeah.
DENNIS BERMAN: So the problem I think going ahead is what is that next product? You`ve seen people with the watch. I`ve never actually seen people use the watch.
GAYLE KING: Yeah.
DENNIS BERMAN: But they are--
GAYLE KING: Yeah.
DENNIS BERMAN: They are wearing the watch. I think we get to the question of are they going to build a car, are they going to have augmented reality. That is the big question. What`s the next thing?
CHARLIE ROSE: And part of the problem is the iPhone 6 was such a huge success.
DENNIS BERMAN: Huge hit.
CHARLIE ROSE: Not only domestically but internationally.
DENNIS BERMAN: Huge hit.
CHARLIE ROSE: It`s hard to find anything that can be that good.
DENNIS BERMAN: Well, of course, Tim Cook would say wait till September.
CHARLIE ROSE: Right.
DENNIS BERMAN: There you`ll find the iPhone 7 in all of its glory. You`ll have lots of new features. But--
GAYLE KING: Go ahead. Go ahead.
DENNIS BERMAN: But what`s happening is that people are holding on to their phones longer. They`re really--
GAYLE KING: Yes.
DENNIS BERMAN: --quite incredible machines and they might do something ten- percent better, a little bit better. But the length at which they`re holding on to them is-- is growing and that is hurting Apple`s iPhone sales.
GAYLE KING: That`s such an interesting comment you made about the watch. Because everybody I know that started out with the watch, very few of them are still wearing them. That`s number one. But, number two, we`re all sitting at the table with iPhones. Norah`s got two iPhones sitting over there. Tim-- Tim Cook the other day said that it`s been a challenging quarter. How does he-- how does he explain the drop? What happened?
DENNIS BERMAN: Well, the drops in China sales.
GAYLE KING: Okay.
DENNIS BERMAN: That`s where a lot of the new buyers are going. And, frankly, more people around the world have the smartphones that they didn`t have three, four, five years ago. So there are just not enough people who want to buy them overall.
CHARLIE ROSE: With all the cash they have, are they going to be in the market to buy things?
DENNIS BERMAN: The answer is no. I heard someone yesterday say, oh, they`re going to buy Tesla. That`s a crazy idea.
CHARLIE ROSE: Right.
DENNIS BERMAN: They can buy all kinds of things. They have so much money. But are they going to do some huge, crazy deal, no. I mean it`s just not in Apple`s DNA.
CHARLIE ROSE: So they`re dependent on the products that are in the pipeline to regain the earnings?
DENNIS BERMAN: Yes. And in that regard it`s so interesting to see the likes of Facebook, which is pushing hard into virtual reality. Apple is not quite there. So, perhaps, they`ll unveil a new hair dryer, is that what you guys are talking about, a new product?
GAYLE KING: It was supposed to be a surprise, Dennis.
DENNIS BERMAN: Okay.
GAYLE KING: It was a tease.
NORAH O`DONNELL: Yeah.
DENNIS BERMAN: Back to unveiling a--
NORAH O`DONNELL: Thanks, Dennis.
DENNIS BERMAN: --a new product--
NORAH O`DONNELL: Thanks, Dennis. We`ll be sure to have you back.
DENNIS BERMAN: Stay put. Stay put.
NORAH O`DONNELL: Be sure to have you back.
CHARLIE ROSE: Wait for the iPhone 7. Thank you, Dennis.
GAYLE KING: Dennis will be leaving now. Thank you, Dennis. We don`t need to worry about iPhone. Thank you, Dennis. It`s good to see you. Well, when people spoil a surprise.
Nearly a million people have joined the growing boycott against Target over its bathroom policy. Ahead, we`re going to ask Mellody Hobson about the gamble by businesses that take a stand.
And don`t forget the new daily Eye Opener eye mail--your world in ninety seconds now direct to your inbox or you could just ask Dennis. Go to CBSThisMorning.com to sing up.
It is now seven nineteen--
CHARLIE ROSE: Mellody will have some ideas.
GAYLE KING: That`s right.
CHARLIE ROSE: We`ll see.
GAYLE KING: Time to check your local weather.
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NORAH O`DONNELL: Prince`s apparent lack of will could spark a court fight over an estate set to be worth more than a quarter billion dollars.
GAYLE KING: Ahead, what he could be hiding in the artist`s secret vault in his Minnesota compound.
CHARLIE ROSE: The news is back in the morning right here on CBS THIS MORNING.
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NORAH O`DONNELL: Dyson has already raised the bar for vacuums and fans. Now only on CBS THIS MORNING the innovator`s new product trying to shake up hair care.
GAYLE KING: And tomorrow, comedy team Key & Peele kick off a new series, Something in Common. Local news is next.
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