Apple Inc is to cut back on hiring for some divisions after selling fewer iPhones than expected and missing its revenue forecast for the holiday quarter, according to people familiar with the matter.
Apple chief executive Tim Cook made the disclosure to employees earlier this month in a meeting the day after he penned a letter to investors about the company’s recent struggles, particularly in China.
During the meeting, Cook was asked if the company would impose a hiring freeze in response. He said he did not believe that was the solution. Instead, Cook said some divisions would reduce hiring, according to the people, who asked not to be identified discussing private matters.
Cook said he has yet to fully determine which divisions would cut back on hiring, but said that key groups such as Apple’s artificial intelligence team would continue to add new employees at a strong pace. He also emphasized that a division’s importance to Apple’s future is not measured by hiring rates.
An Apple spokesman did not respond to a request for comment.
Apple has been on a hiring spree in the past decade, but the pace of headcount growth has slowed in recent years. The company added about 9,000 workers in its most-recent fiscal year for a total of 132,000. A year earlier, Apple added about 7,000 employees.
Apple shares slipped less than 1 percent in extended trading on Wednesday. The hiring pullback would not affect plans to open new offices in Austin, Texas, nor expand in the Los Angeles area, where Apple is building out its original video content team, Cook also said.
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.
Apple on Jan. 2 cut revenue guidance for the holiday quarter to US$84 billion from between US$89 billion and US$93 billion, the first time it reduced its sales forecast in almost two decades. The company blamed the lower outlook on weaker iPhone sales due to economic and industry headwinds, mostly in China.
While lower iPhone sales dragged down revenue, Cook earlier this month said that the company’s services business would grow to US$10.8 billion in sales during the holiday quarter. In his meeting with employees, he stressed the importance of services to the company’s future.
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