Apple lowers holiday quarter guidance on lower than expected iPhone sales

Posted:
in AAPL Investors edited January 2
In a surprise move, Apple on Wednesday revised down revenue guidance for its current December quarter, with CEO Tim Cook blaming the performance on lower than expected iPhone sales.

Apple iPhone X in China


The company is now aiming for $84 billion in revenue, Cook wrote in a letter to investors. That's beneath a forecast issued in November, which anticipated numbers between $89 billion and $93 billion.

Supporting recent analyst concerns, Cook admitted that Apple has seen "fewer" iPhone upgrades than anticipated, blaming factors such "foreign exchange headwinds" from a strong U.S. dollar and "economic weakness in some emerging markets."

"Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline," Cook said. "While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements."




Other figures are "broadly in line" with predictions, Cook continued, cautioning that it will be several weeks before the final data is presented.

Another factor hurting revenue was supply constraints for AirPods, the iPad Pro, the Apple Watch Series 4, and the redesigned MacBook Air.

"These last two points have led us to reduce our revenue guidance," Cook explained, specifically attributing all of the company's global revenue decline to a slowing Chinese economy and the trade war initiated by U.S. President Donald Trump. Shrinkage in the Chinese smartphone market has been "particularly sharp," to the point that the non-iPhone segments of Apple's worldwide business -- iPads, Macs, Watches, services and accessories -- cumulatively grew 19 percent.

Cook also cited low-cost battery replacements and fewer carrier subsidies for a lack of iPhone upgrades.

Trying to put on a positive spin on the situation, the letter claims "many positive results" for the December quarter, including an install base up 100 million units in 12 months, and over $10.8 billion in services revenue, achieving quarterly records in every region. The company is reportedly "on track" to doubling services revenue between 2016 and 2020.

Wearables revenue was up nearly 50 percent year-over year, and the company is poised to score all-time revenue records in the U.S., Canada, Germany, Italy, Spain, the Netherlands, and South Korea. Records have already been set in Mexico, Poland, Malaysia, and Vietnam, and Apple is predicting a best-ever earnings-per-share (EPS) figure.

Apple halted after-hours trading pending the release of Cook's note and the stock is currently down seven percent.
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Comments

  • Reply 1 of 295
    I am holding off on a new iPhone and am sticking with my 6S Plus for a while longer due to Apple's higher prices. I'm sure I am not the only one...
    caladanianbrian65plsentropysrogifan_newblurpbleepbloopdws-2AppleExposedTomEbdkennedy1002elijahg
  • Reply 2 of 295
    avon b7avon b7 Posts: 4,064member
    Well, that was pretty clear. At least in part, pricing really IS an issue and I think a DED article today was implying China was performing well for Apple.
    edited January 2 caladanianTomEelijahgasdasdcurtis hannahmuthuk_vanalingam
  • Reply 3 of 295
    jccjcc Posts: 216member
    Here we go...the ring of fire song by Cash comes in handy right about now....hold on to your pants folks. Especially you young ones who hasn’t experienced this before...
    cornchipSpamSandwich
  • Reply 4 of 295
    djsherlydjsherly Posts: 1,022member
    I wouldn’t call it surprising - the first sign there was an issue was the promotional trade in pricing and more aggressive feature promotion.

    That’s a 7-10% revenue miss that Apple are expecting. Hopefully they’ve extrapolated correctly for the remainder of the quarter
    yojimbo007designrrogifan_newelijahgcurtis hannahmuthuk_vanalingamelectrosoft
  • Reply 5 of 295
    magman1979magman1979 Posts: 1,136member
    Not much of a surprise here considering the economic conditions in China, especially with Donald Dumbshit Trumper starting a trade war with them...

    Now just watch the Wall Scum anal-ysts twist Tim's statements around to look like "Apple is dead, sell sell sell!!!"

    Yup, I see the typical suspects already issuing their hyperbolic headlines, so predictable.

    Apple, if you're reading this, use it as an opportunity to buy back more AAPL!
    edited January 2 AppleExposeddewmebaconstang
  • Reply 6 of 295
    Jeremyl007Jeremyl007 Posts: 1unconfirmed, member
    Hint Apple: Don't sell phones for $1500 or airpods for $175... there comes a breaking point when people will start saying no and move to cheap android alternatives for a quarter of the price.. 
    designrcaladaniandws-2Grayeaglewilliamlondoncurtis hannahmuthuk_vanalingamanantksundaramelectrosoftkitatit
  • Reply 7 of 295
    larryjwlarryjw Posts: 396member
    So Trump's tariff war have now cost just one company, Apple, at least $5B in revenue for just this one quarter. 
    magman1979dewmeasdasdbaconstangjony0
  • Reply 8 of 295
    What's that "splat" sound you hear?

    It's millions of haters/losers/idiots all over the world having a collective orgasm at hearing this news. Seems they can only be happy when there's bad news about Apple.
    cornchipmagman1979tmayAppleExposedmacseekerroundaboutnowwilliamlondonbaconstangjony0
  • Reply 9 of 295
    mubailimubaili Posts: 393member
    The earning call on Jan 29 would be interesting. I pray Apple drop to $100 a share. Also, what is Warren Buffett's average cost for Apple?
  • Reply 10 of 295
    Expect the share price to dive when markets open tomorrow. 

    I posted earlier about the ridiculous pricing of the latest iPads as an example. The iPhone is just as bad.  Their greed is catching up with them. 

    So unit sales are down, and now revenue is a chunk below their own forecast too (not even the analysts can be blamed here).  Increasing the prices to stupid levels only hurts the customer base in the long run. 

    It certainly put be off off upgrading my old MacBook Pro and iPad. 
    entropysasdasdelijahgGrayeagleelectrosoftkitatit
  • Reply 11 of 295
    lennlenn Posts: 36member
    HAHA! Looks like Cook's strategy of huge profit margins and raising the price of all things Apple is starting to backfire. Now if only more people would refuse to pay these insane prices Apple might sack Cook and put an innovator in charge instead of a penny pusher. Not holding my breath though.....
    bitmodasdasdGrayeaglemike54muthuk_vanalingamfreethinkingkitatituktechieirelandjume
  • Reply 12 of 295
    sirlance99sirlance99 Posts: 1,145member
    What's that "splat" sound you hear?

    It's millions of haters/losers/idiots all over the world having a collective orgasm at hearing this news. Seems they can only be happy when there's bad news about Apple.
    This is Tim Cook saying we fucked up. Which happens from time to time. Even for Apple. Apple will be just fine for the long foreseeable future, but you can bet that there will be more bad news from Apple over the next few years. 

    Stop defending Apple no matter what. Call them out when they screw up and celebrate their victories when they have them. 
    avon b7gatorguydesignrrogifan_newblurpbleepbloopbitmodasdasdelijahgGrayeaglemike54
  • Reply 13 of 295
    lennlenn Posts: 36member
    mubaili said:
    The earning call on Jan 29 would be interesting. I pray Apple drop to $100 a share. Also, what is Warren Buffett's average cost for Apple?
    He's probably buying more Apple just to offset his huge losses on the stock hoping it will go back up to over $200 in the next few years. He wasn't very smart to put 25% of the money he controls in 1 company. That's really a rookie mistake.
    Grayeaglemuthuk_vanalingam
  • Reply 14 of 295
    Too dang expensive for what is rapidly becoming a commodity. 
    Grayeaglemuthuk_vanalingamkitatit
  • Reply 15 of 295
    cornchipcornchip Posts: 1,362member
    Calling all trolls! 

    AppleExposedwilliamlondonracoleman29baconstang
  • Reply 16 of 295
    lennlenn Posts: 36member
    What's that "splat" sound you hear?

    It's millions of haters/losers/idiots all over the world having a collective orgasm at hearing this news. Seems they can only be happy when there's bad news about Apple.
    I've been an Apple users for decades. I only started cheering against Apple when Cook took over and started raising the prices on everything. Up until now there's been enough suckers to keep the stock rocketing through the roof. Hopefully people have gotten more sense now and will refuse to pay these outrageous prices just so Apple can keep their insane profit margins going.
    elijahgGrayeaglemuthuk_vanalingamfreethinkingkitatitlmac
  • Reply 17 of 295
    avon b7avon b7 Posts: 4,064member
    What's that "splat" sound you hear?

    It's millions of haters/losers/idiots all over the world having a collective orgasm at hearing this news. Seems they can only be happy when there's bad news about Apple.
    Truly. No one cares but if this news was about Samsung or Google you would be celebrating.

    I refused to buy a 2018 iPhone due to pricing. Just as I refused the previous year's offerings.

    When these last minute Apple promotions appeared, Apple got the sale but only by the skin of its teeth. I gave my reasons and millions of people probably share them. I definitely won't have orgasms over this news.
    edited January 2 muthuk_vanalingam
  • Reply 18 of 295
    Timmy can blame it on emerging markets as much as he want, but the real problem is a product mix that is outdated or underperforming at the current price points (for the Mac), and overpriced products on mobile (iOS).
    elijahgGrayeaglewilliamlondonAI_liasmuthuk_vanalingam
  • Reply 19 of 295
    magman1979magman1979 Posts: 1,136member
    And right on cue, the salivating trolls come marching onto EVERY Apple site in existence by the truckload!
    AppleExposedcornchipwilliamlondonbaconstang
  • Reply 20 of 295
    What's that "splat" sound you hear?

    It's millions of haters/losers/idiots all over the world having a collective orgasm at hearing this news. Seems they can only be happy when there's bad news about Apple.
    This is Tim Cook saying we fucked up. Which happens from time to time. Even for Apple. Apple will be just fine for the long foreseeable future, but you can bet that there will be more bad news from Apple over the next few years. 

    Stop defending Apple no matter what. Call them out when they screw up and celebrate their victories when they have them. 

    Who's defending Apple? I'm making fun of all the losers whose happiness depends on someone failing, whether it be Apple or someone else.

    And how exactly did Apple "fuck up"? Is Tim Cook in charge of China/US relations regarding trade? Does he control the value of the US dollar related to other countries? Seems like the only thing Apple did was to slightly over estimate sales. That's hardly a "fuck up".


    I've said all along iPhone sales will level off. They have to as there's not enough customers in the world to keep their growth going on indefinitely. Then Apple will be in the "terrible" position of having to settle with 200 million iPhone sales a year to people upgrading their older devices. The rest of the smartphone world would die to be in the same "predicament" that Apple is.

    Meanwhile, Wall Street will punish Apple severely for this. Seems like a good time to buy stock (or for Apple to increase their buybacks).
    JFC_PAdewmeAppleExposedfastasleepelijahgroundaboutnowGrayeaglebageljoeybaconstangmagman1979
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