Apple

The CEO of Apple Tim Cook published a letter to the investors on 2, Jan 2018. In the letter, he declared a warning of weaker than expected first-quarter earnings, citing “fewer iPhones upgrades than we anticipated.”

The demand for iPhones weakened initially from China. Cook also stated that “in some developed markets, iPhone upgrades also were not as strong as we thought they would be.”

Simply, people aren’t buying as many new iPhones as Apple hoped they would buy.

Further Explanations

In the letter, Cook suggests multiple explanations for the lower earnings. He predicts that it could be because of the earlier launch timing of the iPhone XS and XS Max compared to the iPhone X, the strength of the US dollar, supply constraints due to the number of new products that Apple released in the fall and overall economic instability in the markets. But the core issue remains simple. That people just aren’t buying as many new iPhones as Apple hoped they would.

As stated by Cook in his letter, “Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfalls to our guidance and for much more than our entire year-over-year revenue decline.

Other divisions of Apple apparently rise, by almost 19% year over year. But the iPhone is the basic fundamental of Apple’s core business. And if Apple fails to sell a decent number of them, the whole company struggles.

Per Cook’s letter, “Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfalls to our guidance and for much more than our entire year-over-year revenue decline.” Cook notes that other divisions of Apple have actually risen by almost 19 percent year over year, but the truth remains that the iPhone has long been Apple’s core business, and if Apple can’t sell enough of them, the whole company struggles.

All in all, Apple’s revised Q1 guidance forecast is dropping by up to $9 billion in revenue. When compared to its original estimate. Apple’s stock dropped by nearly 10 percent once trading resumed.

 

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