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January 02, 2019
Apple plunges on guidance as iPhone sales disappoint

Apple (AAPL) unexpectedly slashed its revenue forecast for the fiscal first quarter of 2019, citing weakness in its key market in China and lower-than-anticipated iPhone revenue.

The company said in a filing released after market close Wednesday that it now sees first quarter revenue of about $84 billion, from $89 billion to $93 billion anticipated previously.

Trading was halted for Apple shares at about 4:25 p.m. ET in advance of the release of the announcement. The stock declined 8.49% to $144.51 per share when trading resumed 25 minutes later, hitting the lowest level since July 2017.

In the filing, Apple CEO Tim Cook attributed the reduced guidance to weakness in emerging markets and in Greater China. For the fiscal fourth quarter of 2018, about 18% of Apple’s revenue came from China.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook said in a statement. “In fact, most of our revenue shortfall to our guidance, and over 100% of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”

Operators Reducing Level Of Subsidies On Hardware Globally

Tim cook says, “…consumers adapting to a world with fewer carrier subsidies…“ this confirms what we said well over a year ago that operators globally are getting out of the device subsidy game. Retail customers and Business customers are now starting to experience what it means when a $1,000+ device is being demanded

The challenge Apple is facing is not unique to Apple but will be faced by every mobile OEM

Take a look at an Operator’s P&L and you will see that the revenue growth is “Hardware Sales” and has been the case for well over 15 months

Apple plunges on guidance as iPhone sales disappoint