Apple lowers revenue guidance for Q1 2019, expects a $9 billion drop

PUBLISHED BY
Anna Domanska



TAGS:


3 years ago




Apple has confirmed that the company is starting 2019 with shortfalls. A public letter to shareholders from CEO Tim Cook surfaced yesterday to explain that Apple expects a $9 billion drop in revenue, from a previous forecast of $93 billion to new forecast of $84 billion, in the first quarter of 2019

The new iPhone range is not delivering, particularly in China, the company said. Apple’s revenues from computers, wearables, and divisions for services have improved year-on-year in revenues by nearly 19 percent, though not as much as Apple had anticipated. But iPhone sales have taken a completely different trend in the quarter.

Apple reiterated a few factors that would be impactful in the Q1’19 it had mentioned to the shareholders in November. The priciest iPhone models – iPhone XS and iPhone XS Max were released in the final quarter of 2018, placing the channel fill and early sales in the Q4, but in 2018, iPhone X was released in the first quarter of 2018, placing the channel fill and early sales in the December quarter, Cook explained in the letter. “We knew this would create a difficult compare for Q1’19, and this played out broadly in line with our expectations.”

The company also blamed the strong US dollar, responsible for “foreign exchange headwinds,” to have slashed Apple’s revenue growth by nearly “200 basis points,” compared to the previous year. An increase in “unprecedented number of new products” during the quarter and “unexpected economic weakness in some emerging markets” both played out broadly in affecting Apple’s first-quarter revenue in 2019, Cook added.

However, China’s economic deceleration impacted more on Apple’s first-quarter revenue. According to the company, the rising trade tensions between China and the United States is also affecting consumers. “Traffic to our retail stores and our channel partners in China declining as the quarter progressed,” said Cook. Apple has since lost a sturdy grip in China’s smartphone market to local competitors even before a current decline in the market.

“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance,” Cook said. “And for much more than our entire year-over-year revenue decline.”

While you are wondering if this decline is any big deal for a trillion-dollar company, there’s a need to note, according to TNW, that this is the first time Apple is recording a decline in its first quarter since 2002. There is a need to also note that Apple CEO Tim Cook would be addressing the company’s staff on Thursday about the decline in iPhone sales which points that Apple is afraid of these numbers.

Apple could depend on other products in its catalog, not just iPhones to brace macroeconomic challenges like this. While this won’t be easy, at this stage Apple has no choice but to stay away from excuses to shareholders. There could be a need for an entirely new compelling product from the tech giant in the future. Apple’s next earnings call is scheduled for January 29th.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Supply chain crisis bad news for automotive industry leaders

Supply chain crisis bad news for automotive industry leaders

The world’s biggest car companies are on track to lose production of 7.7 million vehicles in 2021. The forecast advices automakers on supply chain and other issues.
2 days ago
Scammers dupe Apple fans with free bitcoin lure

Scammers dupe Apple fans with free bitcoin lure

Savvy scammers used a fake event stream, a fake Apple website, and the promise of free bitcoin to lure fans into opening up their wallets.
3 days ago
Japan’s MUFG offloads Union Bank to U.S. Bancorp for $7.3 billion

Japan’s MUFG offloads Union Bank to U.S. Bancorp for $7.3 billion

The total amount of cash to be received as part of MUFG Union Bank’s sale to Bancorp is $7.3 billion (800 billion yen).
4 days ago
Evergrande: A black swan event that could spook markets

Evergrande: A black swan event that could spook markets

EverGrande is now known as the “world’s most indebted property developer” and serves as a symbol of corporate excess.
5 days ago
Moderna vaccine more effective than Pfizer, study says

Moderna vaccine more effective than Pfizer, study says

Moderna’s Covid-19 vaccine does a slightly better job of preventing coronavirus-related hospitalizations and emergency department visits.
7 days ago
iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

Apple iPhone 13 Pro and iPhone 13 Pro Max can be a hit with its ever new technology A15 Bionic chip and other cool profound features.
1 week ago