Arthur J. Villasanta – Fourth Estate Contributor
Cupertino, CA, United States (4E) – Apple, Inc. CEO Tim Cook yesterday announced the company’s revenue for its 2019 first quarter will fall to some $84 billion due to a significant slowdown in the sales of its devices in China.
Cook told investors that revised first quarter forecasts estimated revenue at $84 billion, down from the company’s initial estimates of $89 billion to $93 billion. This plunge also represents a drop in sales revenue year-on-year compared to record revenues of $88.3 billion.
Cook admitted the biggest factor in its sharply lower Q1 sales was China’s weakening economy, which is Apple’s third largest market after the U.S. and Europe.
Cook’s rare step in lowering Apple’s sales guidance for the usually robust holiday quarter follows his admission Apple badly underestimated the extent of the debilitating economic slowdown in China. He said the Chinese economy’s slowing down to its weakest pace in 25 years hurt iPhone sales. Trump’s trade war with China also made things worse for Apple.
“We believe the economic environment in China has been further impacted by rising trade tensions with the United States,” said Cook in a statement.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. Most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
Cook noted that as the climate of mounting uncertainty hit financial markets, the effects appeared to reach consumers, as well. One offshoot was that traffic to Apple’s retail stores and its channel partners in China dropped as the quarter progressed.
He also said market data confirmed the contraction in Greater China’s smartphone market was particularly sharp.
Cook said based on these estimates, Apple’s “revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.”
He said Apple two months ago knew the first quarter of its new fiscal year will be impacted by both macroeconomic and Apple-specific factors. Based on Apple’s best estimates of how these might play out, the company predicted it might report slight revenue growth year-over-year for the first quarter.
Wall Street stopped trading on Apple shares at about 4:25 p.m. ET Wednesday in advance of Apple’s guidance announcement. As expected following the demoralizing report, Apple’s stock fell 8.49% to $144.51 per share when trading resumed 25 minutes later — the stock’s lowest level since July 2017.
Article – All Rights Reserved.
Provided by FeedSyndicate