Apple cuts revenue forecast for first time since iPhone launched in 2007
San Francisco: Following weaker than expected iPhone sales, particularly in China, Apple has lowered its revenue guidance for fiscal 2019 first quarter.
In a letter to investors on Wednesday, Apple CEO Tim Cook said that the company now expects revenue of approximately $84 billion, down from the $89 to $93 billion it had previously projected.
Cook acknowledged that the revenue shortfall in its guidance was partly due to China's trade tensions with the US. The slowdown in the Chinese economy also impacted its revenue, he said.
Apple stock fell about seven per cent on the news, CNBC reported.
"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 fact, most of our revenue shortfall to our guidance, and over 100 per cent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad," he added.
Cook said that lower than anticipated iPhone revenue, primarily in China, accounts for all of Apple's revenue shortfall to its guidance and for much more than its entire year-over-year revenue decline.
"And, while we saw challenges in some emerging markets, others set records, including Mexico, Poland, Malaysia and Vietnam," he said.
"Our profitability and cash flow generation are strong, and we expect to exit the quarter with approximately $130 billion in net cash," Cook said.
Apple also cited supply "constraints" for some products, including its latest Apple Watch and iPad Pro.
The update suggested a disappointing figure for iPhone sales, the key driver of revenue and profit for the California tech giant. "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."
Apple will report the next quarter results on January 29.
Shares in the company fell 7.6 per cent to $146 in after-hours trading and US stock markets were poised for further big falls at the open.
Dow futures and the broader S&P 500 futures were down 1.4 per cent. Europe suffered similar declines, with Germany's DAX down 1.3 per cent at 10,451 and France's CAC 40 declining 1.2 per cent to 4,636. Britain's FTSE 100 was 0.4 per cent lower at 6,709.