Apple has lowered its revenue guidance for the December quarter, blaming a slowdown in iPhone sales, particularly in China. The company now expects revenue of US 84 billion for its fiscal first quarter to 29 December 2018, down from earlier guidance of USD 89-93 billion and a reported USD 88.3 billion in the year-earlier period.
In a letter to shareholders, CEO Tim Cook said that much of the shortfall with the earlier guidance was due to the slowing economy in China and other emerging markets. Revenues were also affected by the earlier release of new iPhone models this year compared to the previous year, the stronger US dollar, and supply constraints for certain products, such as the Apple Watch, iPad Pro, Air Pods and Macbook Air.
In addition, these and other factors resulted in fewer iPhone upgrades than the company expected, Cook said. This happened in China, where the trade war with the US appears to have hurt consumer confidence, as well as some developed markets, according to the CEO. Cook blamed "macroeconomic challenges in some markets", as well as consumers adapting to fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements rather than buying a new model.
Other business still growing
The CEO noted that revenue from other business, excluding the iPhone, remained strong, growing by almost 19 percent year-over-year. This included new records in revenue from Services (USD 10.8 billion), wearables and Mac computers. The non-iPhone businesses have less exposure to emerging markets, and the vast majority of services revenue is related to the size of the installed base, not current period sales, Cook said.
EPS is also expected to set a new record in the quarter, and cash flow remained strong, with an expected net cash position of USD 130 billion at the end of the quarter.
Cook said Apple is taking measures to improve results and remains confident in the underlying strength of the business. This includes making it easier for customers to trade in a phone in its stores and finance the purchase of a new iPhone over time.
