Did $1 iPhones Drag Down Best Buy? by Jen Wieczner @FortuneMagazine January 14, 2016, 5:35 PM EST E-mail Tweet Facebook Linkedin Share icons Best Buy’s stock plummeted nearly 10% on Thursday after the company reported a decline in holiday sales and lowered its outlook for its current quarter. Best Buy’s U.S. sales during the recent holiday shopping period were down 0.8% from the previous season, and the consumer electronics retailer now projects that its fourth-quarter revenue will be 1.5% lower than the year before. The declines will break Best Buy’s BBY streak of revenue increases in each of the past five quarters, which had given investors hope that the company’s turnaround strategy was working. The retailer said its holiday sales would have increased from the previous year if not for a worsening problem that could also hurt tech industry stalwarts like Apple AAPL and Samsung: falling demand for mobile phones. Best Buy’s sales of mobile phones, which, along with computers, make up the company’s largest source of revenue—decreased more than 7% during the holiday season. The drop was bigger than the company had anticipated and outweighed the sales increases in all of its other product categories except services (which only accounts for a tiny portion of Best Buy’s overall revenue). It’s a sign that Best Buy’s big bet on Apple, and the iPhone in particular, could be backfiring. With sections of its stores dedicated exclusively to Apple products, Best Buy sells more of some Apple devices than Apple does at its own stores. Best Buy was also the first retailer in the U.S. to carry the Apple Watch. For more on Best Buy’s turnaround progress, read Fortune’s recent magazine feature on the company, “Meet the women who saved Best Buy.” But analysts are growing worried that Apple’s iPhone sales are slowing and may have even declined in the fourth quarter compared to last year. That trend is likely hurting Best Buy as well. Best Buy turned heads just before Christmas when it offered the newest version of the iPhone at a dirt-cheap price of $1. The promotion failed to make up for the shortfall in the retailer’s mobile phone sales, and it may have even contributed to the decline. In fact, Best Buy could have lost up to $199 in revenue for every $1 iPhone 6s it sold (the model is normally priced at $200 with a service contract, and the wireless carriers sometimes cover the cost of discounts on devices). A spokesperson for Best Buy declined to comment. Still, Best Buy’s holiday sales decline of less than 1% looks relatively rosy compared to the rest of the consumer electronics retail industry, which experienced a 4.8% decline in revenue over the same period, according to the NPD Group—and that’s not even including mobile phones. If Best Buy’s peers had a similar drop-off in cell phone sales, industry revenue may have fallen even more sharply. Against that benchmark, Best Buy’s results, however poor, seem a little sunnier.