AUDIE CORNISH, HOST:
Apple had a lousy week. It posted its first quarterly revenue drop since 2003, and for the first time ever, falling iPhone sales. And now the billionaire activist investor Carl Icahn says he's dumping all his shares in the company. Here to discuss Apple's woes is NPR’s Aarti Shahani. Welcome back to the program, Aarti.
AARTI SHAHANI, BYLINE: Hi.
CORNISH: So first start with this news about this investor saying goodbye to Apple.
SHAHANI: Yeah, Icahn was talking yesterday on CNBC, and that's where he dropped the news. Let's have a quick listen.
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CARL ICAHN: We no longer have a position in Apple. We - to start, I think Tim Cook did a great job. I have a great relationship with him. I called him this morning to tell him that, and he was a little sorry, obviously.
SHAHANI: But Icahn goes on to explain, he pulled out because of a huge external threat from his perspective, China. Apple is really dependent on China. It's the second-largest market after the U.S., and Icahn says the Chinese government could suddenly change its mind, close the doors and make it very difficult for Apple to sell there. Earlier this month, China decided to shut down the iBook store and iTunes movies just like that. In the interview, Icahn said China could do something else erratic, so he's cutting loose, and he said he made about $2 billion in Apple, which is not bad.
CORNISH: All right, so you're saying Apple is dependent on China, in what way? What's the extent of that?
SHAHANI: Well, the company's overall game plan is to grow all around the world. For example, right now they're betting big on India, but so far it's not clear if that market will pan out. And in the past, China was Apple's go-to. This last quarter, though, lower sales in China and Hong Kong were responsible for much of Apple's revenue decline. And so, you know, to be clear, there are two separate issues here. One is Icahn's take on the Chinese government, the other is just the smartphone market and how well Apple will perform against competitors like Samsung.
CORNISH: What is Apple doing in response to all of this? I know it's not admitting defeat.
SHAHANI: No, no, they're not taking this lying down. They're not admitting defeat. You know, right after Apple released its weak quarterly numbers, CEO Tim Cook got on this earnings call. An investor - she asked about the future. Does Apple even think of itself as a growth company anymore, or is it a mature tech company - that is, you know, heyday's gone? That's a very loaded question for the largest company on earth. And here's what Tim Cook says on the call. One, yes, it is a problem that the smartphone market is not growing right now, but the market is tough for - everyone competitors too - and it's a temporary situation.
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TIM COOK: My view that is - that's an overhang up through the macroeconomic environment omitting many different places in the world. And we're very optimistic that this too shall pass and that the market and particularly us will grow again.
CORNISH: This too shall pass. What did the investors say?
SHAHANI: Well, it wasn't a great week for Apple on Wall Street. But, you know, a lot of tech stocks were down because of disappointing results. Google or, you know, I should say Alphabet, the parent company of Google, also didn't do too well. On the other hand, Facebook and Amazon, they both reported great earnings and their shares are up. Wall Street is happy with them for the moment.
CORNISH: That's NPR's Aarti Shahani, thanks so much.
SHAHANI: Thank you. Transcript provided by NPR, Copyright NPR.
