Apple to Cut Back on New Hires Following Disappointing Holiday iPhone Sales

[MacRumors]

Apple plans to cut back on hiring for some divisions of the company after disappointing iPhone sales during the holiday season, reports Bloomberg.

Apple CEO Tim Cook shared the news with employees at an all-hands meeting earlier this month. According to sources in attendance, Cook was asked if Apple would implement a hiring freeze, but he said that he didn't believe that was an ideal solution. Instead, select divisions will see reduced hirings.

Cook at the time said Apple had not yet determined which divisions would cut back on hiring, but groups like the AI team will continue to add employees. Cook also told employees that a division's importance to the future of Apple is not measured through hiring rates.

It's not clear how extensive the hiring reduction will be, but new Apple offices planned in Austin, Texas and Los Angeles, California will not be impacted. In 2018, Apple added 9,000 new employees, and in 2017, Apple added 7,000 new employees. According to a recent SEC filing, Apple employs a total of 132,000 people, including its retail locations.

Apple's workforce over the past 10 years, chart via Bloomberg​

Apple held the all-hands meeting shortly after announcing that it was lowering revenue guidance for the first fiscal quarter of 2019 due to fewer iPhone sales than anticipated.

Apple is expecting revenue of $84 billion for Q1 2019, down from a November estimate of $89 to $93 billion and a $4.3 billion drop from the year-ago quarter.

Cook provided multiple reasons for the drop, including iPhone XS, XS Max and XR launch timing, a strong U.S. dollar, supply constraints, economic weakness and trade tensions in China, and weak iPhone upgrade numbers due to fewer carrier subsidies and low-priced battery replacements.

According to Bloomberg, internally, Apple executives have positioned declining iPhone sales as an opportunity for innovation, and Apple is also planning to bolster its growing services category with third-party integrations and an upcoming streaming TV service.

Following Cook's talk with employees, some Apple senior vice presidents held separate meetings with vice presidents, senior directors and other managers in their groups to emphasize that the iPhone sales slowdown is an opportunity for new innovation, according to one of the people.

In addition to fewer new hires in some divisions, Apple has also cut iPhone XR and XS production by 10 percent due to flagging iPhone sales, and it is encouraging more upgrades by dropping prices in China and offering increased trade-in values in the U.S. and other countries.

Article Link: Apple to Cut Back on New Hires Following Disappointing Holiday iPhone Sales

 

[44267547]

Apple needs to focus on in-store services, revamping their pricing structure and understanding the current market when it comes to the iPhone price points and what the consumer wants to upgrade to with a respectable price tag for a smart phone. Hopefully in 2019, we do see some changes in that area.

 

[levitynyc]

Billions upon billions of untaxed cash sitting in Ireland, but let's have a hiring freeze to appease investors.

How about just cutting the prices of Macs and iPhone?

 

[bladerunner2000]

Make a good phone and this won't be a problem... you know; no notch, put in a headphone jack, use the standard USB-C port... things like that.

 

[IUBall22]

I spy lots of excuses

 

[tekboi]

The company has over a Trillion Dollars with obscene amount of money overseas that can't be taxed, but they need to "cut back"?



Greed is what is what is destroying popular opinion of the the company and driving down sales.

 

[ArtOfWarfare]

... what have all of Apple's additions over the last several years been doing, exactly? Certainly doesn't seem to be anything worthwhile given we haven't seen much in the way of new products worth buying.

I agree with Cook that a hiring freeze makes no sense (they have plenty of money to hire the best people - cash is not at all a concern for them), but it seems to me that something is making Apple bloated and slow. They really need to trim the fat, and starting with Cook seems like a good choice.

 

[44267547]

Greed is what is what is destroying popular opinion of the the company and driving down sales.

It’s not just greed, if you look at the smart phone market, it’s completely saturated, which is a result of slower upgrades for those who used the battery exchange program and iOS 12 was a major contributor to the performance factor with older iPhones.

 

[shpankey]

The problem with new iPhones are old iPhones being so good, along with ludicrous pricing.

 

[fumi2014]

I think 2019 is going to be a tough year for Apple as well as Samsung and others. The global smartphone industry is in decline and new, groundbreaking technologies are still some years on the horizon.

 

[Freida]

Reduce prices to more reasonable level. Right now you are losing customers because you pushed it too far. Simple as that!

 

[JPack]

Reduce staff to maintain profit. Anybody who has studied business knows Albert Dunlap ("Chainsaw Al").

He was an executive, professional downsizer, and believed in profit at any price.

https://en.wikipedia.org/wiki/Albert_J._Dunlap

 

[unobtainium]

Here's my hot take: Apple knows more than we do about pricing and market realities. The new iPhones are more expensive because Apple knows it will sell fewer and fewer iPhone upgrades (due to the maturity of the technology and high customer satisfaction with their current devices). To cope with falling sales numbers, Apple is raising prices on the fewer phones it sells. As sales volume goes down, the unit price goes up. In terms of actual price increases, I don't think most consumers are bothered by a few extra dollars a month on their carrier bill due to a slightly larger phone payment. The problem is that consumers don't see the point of upgrading at all.

TL;DR: iPhone sales aren't dropping because the price is rising. Prices are rising because Apple knows they've reached the point where upgrades (and therefore sales volume) is decreasing, and are raising unit prices to compensate.

 

[HiVolt]

Apple needs to focus on in-store services, revamping their pricing structure and understanding the current market when it comes to the iPhone price points and what the consumer wants to upgrade to with a respectable price tag for a smart phone. Hopefully in 2019, we do see some changes in that area.

Yeah, wishful thinking. I'll bet my left nut that the 2019 iPhones will be more expensive, or at the very least the same price.

They'll probably just heavily promote trade-ins like they are now for the XR. More people may take them up on it if the trade in values are actually fair. They're a joke now.

 

[coolfactor]

This was inevitable. The market has matured, and devices are far more powerful than people need. The room for growth is decreasing.

 

[jpn]

angela ahrendts' concepts are tombstones and mausoleums.

apple is not burberry.

keep clean, sleek retail architecture (which she herself does not control even now), but less costly locations without the glitz that she has been in charge of.

tim, get off the cool-aid you have been on.
get back to creating and delivering on schedule great products we want.

get back to thinking different.

 

[Rob_2811]

Project Titan is now a go cart.

 

[44267547]

Yeah, wishful thinking. I'll bet my left nut that the 2019 iPhones will be more expensive, or at the very least the same price.

And that may be, and I’m not sure what Apple will do in terms of offering more trade-ins, incentives, ect, but regardless, they have to realize that it’s not just China’s market, it’s the consumer does see the full value in a $1000 smart phone for stainless bands, OLED displays, Animoji, etc. What they see, is that their current phone does everything they need it to, so they ask themselves the question, “Do I really need to upgrade to $1000”? And the answer is likely not. The sooner Apple can make the appropriate adjustments, the better they can stay on course.

 

[coolfactor]

The company has over a Trillion Dollars with obscene amount of money overseas that can't be taxed, but they need to "cut back"?

Greed is what is what is destroying popular opinion of the the company and driving down sales.

Why would money earned over seas in other countries be eligible for taxation by the US government? Which one is greedy in that scenario?

 

[Baymowe335]

This is probably misunderstood. Apple is going to hire the number of people they want.

LOL at people acting like Apple has some kind of cash crisis because they reduced revenue guidance in 1 quarter. They are still going to make $20B in profit in Q1.

I doubt their ability to hire people making $150,000/yr is impacted one iota.

 

[coolfactor]

Cut back on "new hires"... not reducing staff, unless the staff drop-off rate is higher than the hiring rate. They are not cutting existing staff, just reducing the intake. Big difference.

As for "disappointing" sales... what is disappointing are the expectations of Wall Street.

 

[Rob_2811]

You should all do your bit, stop by your local store and buy a lightning cable or a dongle. Every cent counts!

 

[44267547]

This is probably misunderstood. Apple is going to hire the number of people they want..

But does that take away the fact that Apple still might have to make necessary adjustments where they’re not hiring as many people as they expected or anticipated? Isn’t that really the point of what we’re discussing here, is that due to the unexpected decline in various areas, Apples projections likely were off, now they need to make the necessary adjustments for future hires. That’s called rudimentary retail 101.

 

[TheRealDGD]

Two words: Keynesian Economics......... Even the Great Tim can't reinvent the wheel..

 

[costeta]

Tear down this wall, Mr Cook.