Apple Shares Fall as Design Chief Jony Ive Plans Exit

By Dave Sebastian 

Apple Inc. shares ticked lower after the iPhone maker said its design chief Jony Ive is leaving the company later this year to form his own independent design firm.

The Cupertino, Calif., company's stock fell 1% in early trading Friday to $197.80.

Mr. Ive, who has been at the helm of the design team since 1996, helped design the iPhone, which has driven Apple's sales and profit for most of a decade. Mr. Ive also oversaw the development of key products such as the iPod, iPad and MacBook.

Mr. Ive's planned new company, named "LoveForm," will count Apple among its main clients, Apple said Thursday.

His departure marks the end of an era at the iPhone maker as it shifts to an emphasis on services from product development. Sales and earnings for the quarter ended in March slipped from the prior year -- its first drop in more than two years. The two measures had fallen in the holiday quarter for the first time ever, the company said in January.

Investors may question Apple's ability to retain leading industrial design after Mr. Ive's departure, but his exit comes at a "sensible time" when the smartphone market is slowing, Nomura Instinet analysts said in a note to investors Friday. As sales have largely plateaued for the iPhone, the company is seeking new avenues for growth, largely from the sale of app software, entertainment content, financial tools and other services.

"He represents a particularly strong connection to Apple iconic heritage given his intimate role in developing many of Apple seminal products" and his tight bond with late Apple co-founder Steve Jobs, the analysts said. "His departure, therefore, should prompt such nostalgia."

Nomura Instinet, which referred to the move as a "sentimental negative," maintained its target price of $175 a share on Apple stock.

Wedbush analysts said in a note Thursday that while there are questions about Apple's product innovation, they aren't overly concerned about Mr. Ive's exit because he'll be working closely with the firm going forward. Wedbush said Apple remains as the most safe among its large technology peers as regulators and legislators raise potential antitrust issues.

Wedbush maintained its outperform rating on Apple stock and a share-price target of $235.

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Write to Dave Sebastian at [e-mail]

(END) Dow Jones Newswires

June 28, 2019 10:57 ET (14:57 GMT)

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