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Apple Cuts Revenue Forecast on Weak China Sales

11 January, 2019, 05:29 | Author: Melinda Barton
  • Apple CEO Tim Cook

He said he expects first-quarter revenue to be around $84 billion, compared with previous guidance of revenues between $89 billion and $93 billion.

Apple halted after-hours trading of its shares briefly on Wednesday afternoon to announce to shareholders that it had a worse-than-expected holiday quarter.

And while Apple noted its Q1 revenue excluding the iPhone was up 19% year over year, which BMO said surpassed its expectations, the firm added "we do not believe these businesses are big enough to offset the negative iPhone sentiment".

Apple CEO Tim Cook did lay out a plan for turning around Apple's fortunes going forward.

"We did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook wrote.

Cook said the iPhone "accounts for all of our revenue shortfall", whereas other products in Apple's lineup such as the Mac and iPad are seeing strong growth. It was the first time since June 2002 that Apple issued a reduction in its quarterly revenue forecast. They have fallen 32pc from an October peak.

The fact that Apple took the dramatic step of halting trading is an indication that the company was taken by surprise by the iPhone sales shortfall.

"This is Apple's darkest day during the Cook era, " Wedbush Securities analyst Daniel Ives said.

Automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co all previously said they planned to cut production in the country.

The world's second largest economy, China is feeling the effects of a darkening trade outlook and government attempts to rein in risky lending after a rapid rise in debt levels. "Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter", Cook wrote in a long-winded letter to investors.

Cook also acknowledged that consumers in other markets aren't buying as numerous latest iPhones, released last fall, as Apple had anticipated.

"We've started a program worldwide where we dramatically lower the battery replacement price". A survey past year found that more customers were buying the cheaper iPhone 8 rather than the pricier iPhone X, perhaps signaling that people weren't willing to pay up for the latest bells and whistles.

In November, the company said it would stop reporting unit sales data for iPhones and other products. Revenues for all of its other categories - Services, Mac, iPad and Wearables/Home/Accessories - collectively grew nearly 19 percent year-over-year.



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