Apple is cutting billions from its revenue estimates for the just-ended holiday season, citing sharply slower iPhone sales in China.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” CEO Tim Cook said Wednesday in a letter to Apple investors.
To Apple investors:
Today we are revising our guidance for Apple’s fiscal 2019 first quarter, which ended on December 29. We now expect the following:
- Revenue of approximately $84 billion
- Gross margin of approximately 38 percent
- Operating expenses of approximately $8.7 billion
- Other income/(expense) of approximately $550 million
- Tax rate of approximately 16.5 percent before discrete items
We expect the number of shares used in computing diluted EPS to be approximately 4.77 billion.
Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.
While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates.
Cook lowered the company’s revenue guidance for the three months that ended Dec. 29 to about $84 billion from as much as $93 billion.
The announcement of weakness from one of the world’s largest companies offers fresh evidence of a global economic slowdown, which has sent stock markets sliding in recent months.
Cook said that in its earlier projection, Apple had “expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected.” The company also saw “fewer iPhone upgrades than we had anticipated,” he said.
In August, Apple became the first private sector company worth $1 trillion. But its stock has dropped more than 30 percent in the past three months, leaving its market cap at below $750 billion. Apple’s stock fell an additional 9.3 percent Thursday morning.