Apple cuts revenue guidance because of slow sales in China

China Takes Wind Out Of Apple iPhone Sales

"In fact, 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".

Apple's CEO went on saying that consumers adapting to a market where carrier subsidies are scarce, the price increases due to United States dollar strength fluctuations, and some of its customers postponing an iPhone upgrade by replacing the battery in their old model are also behind the shrinking of the iPhone revenue.

If Apple racks up some $84bn by the end of the first quarter, it will be a decrease of more than $4bn from the same period a year ago, when it pocketed $88.3bn.

While Apple expected economic weakness in some emerging markets, "this turned out to have a significantly greater impact than we had projected", CEO Tim Cook wrote in a letter to shareholders. Nowadays though, the iPhone is more expensive than ever and less people seem interested in upgrading, leading to Apple issuing its first "profit warning" since 2002.

Like other luxury brands, Apple's sales are largely tethered to the Chinese economy - which began to slow in the second half of 2018. "I think that there are a heck of a lot of USA companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China".

As The Verge social networks columnist Casey Newton said, many analysts have pointed towards the high specifications and strong performance of Apple's previous mobile phone models as the major contributing factor to the company's short-term struggle. Apple will be keen to prove that its disappointing quarterly earnings are not part of a wider trend. When the suspension on selling was lifted, Apple shares fell 7.45%.

Apple's shares were halted after the stock market closed Wednesday. Apple released a brief report today that showed expectations of revenue at $84 billion with a gross margin of approximately 38 percent.

In a note to investors, Apple CEO, Tim Cook, revealed that the company was revising its estimates for end-of-year income.

Financial markets have started the new year in much the same rocky way as they ended 2018.

In his letter, Cook blamed the earlier launch timing of the iPhone XS and XS Max compared to the iPhone X, the strength of the U.S. dollar, supply constraints due to the number of new products Apple released in the fall, and overall economic weakness in some markets. While that sounds alright in theory, we can't help but think Apple should try a bit harder, perhaps even shift to focus on services more.

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