Apple stock struggles with iPhone issues and new device headache

Apple stock is having a rough couple of months with doubts around demand for its new iPhone. The mood is unlikely to be lightened by news it faces a potential import ban on certain models of its Apple Watch.

The U.S. International Trade Commission on Thursday found Apple (ticker: AAPL) had violated patents held by medical-technology company Masimo (MASI) over measuring blood-oxygen levels and issued a limited exclusion order on certain Apple Watches, banning their import to the U.S.

It’s not a huge blow to Apple. Sales of Wearables, Homes, and Accessories products—the category that includes the Apple Watch—came to $8.28 billion in the company’s latest quarter, out of the company’s total net sales of $81.80 billion. However, it’s a headache the company could do without as it looks to fight back against criticisms that its latest iPhone model showed a lack off innovation.

Apple now has a few options. The company could make changes to its smartwatches, it could reach a settlement, or it could hope to successfully appeal the decision. The Biden administration also has the option to overrule the commission’s decision within 60 days.

Apple said it would appeal the decision and it wouldn’t have an immediate impact on smartwatch sales, according to The Wall Street Journal. Apple didn’t immediately respond to a request for comment from Barron’s.

Masimo shares rose 10% in premarket trading on Friday. Apple was up 0.2% at $167.20, having fallen 15% over the last three months through Thursday’s close.

The bigger point of attention in Apple’s September-quarter earnings report next Thursday will be iPhone sales. Analysts at J.P. Morgan recently cited signs of weaker demand for the iPhone 15 than its predecessor at the same time last year.

Apple is expected to report quarterly sales of $84.67 billion, down from $90.60 billion for the same period the previous year, according to a FactSet consensus. Sales of iPhones are expected to fall to $41.53 billion from $42.84 billion.