Apple is working harder to squeeze juice out of its iconic iPhone. The company sold more units in the holiday quarter, yet profit fell. A saturating market and slowing innovation aren't helping margins. Yet the prospect of a new phone and the ability to sell additional services are bright spots that should keep investors on board.
Apple's figures are astonishing, with quarterly revenue hitting $78 billion and profit dialing in at $17.9 billion. Only a handful of American companies earn more in a year than Apple did in the quarter. Yet its fortunes are tied up in handsets, with the iPhone accounting for nearly 70 percent of sales. With perhaps 2.5 billion smartphones now being used around the world, according to various estimates, it's getting harder to find new customers. The company's revenue rose only 3 percent from the same period last year.