In a letter shared with investors on January 2, Cook would reveal revenue in the company's first quarter ending December 29, missing Apple's own forecasts by about 15 percent. He put most of the blame on an economic downturn in China. "In fact, most of our revenue loss is in our guide, and over 100 percent of our worldwide revenue decline across China across the iPhone, Mac, and iPad," he wrote.
Cook also appealed a decrease in carrier phone subsidies and higher prices abroad caused by a strong dollar. Customers have also taken advantage of Apple's $ 29 battery provider offerings that allow consumers to squeeze more out of their older iPhones. The company now sees a turnover of $ 84 billion, well below $ 89 billion for $ 94 billion, as expected in November.
Earnings warning was Apple's first for more than 15 years.
The weaker peak season – a period when most of Apple's iPhones are sold –that industry as a whole, and especially Apple, is struggling with consumer smartphone fatigue. Many people also pointed to the high price tags on Apple's latest phones. The iPhone XS ranges from $ 999 to $ 1,349 depending on storage capacity, and the XS Max with 512 GB storage costs as much as $ 1,499. In comparison, the MacBook Air starts at $ 849.
The company had raised a red flag in November when it said it would stop reporting how many units it sells every quarter.
On Tuesday, investors will get a more detailed picture of what is missing and why. More importantly, analysts say what Apple says during the second-quarter state conference ending March.
"The big question is how much iPhone channel inventory Apple built in Q1," Toni Sacconaghi, an analyst at Bernstein, wrote in a note to investors last week. Sacconaghi encouraged investors to listen to comments on replacement cycles for iPhone, reasons for the decline in China and the demand in other regions for the iPhone. "Our claim [is] that China seems to account for only half of the iPhone's Q1 deficit," he wrote.
UBS analyst Timothy Arcuri raised similar concerns in his investor label and wrote that he would be aware of what Apple says about iPhone stock levels, how long the company expects to be affected by demand in China, potential price reductions, and iPhone upgrade cycles.
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