Apple CEO Tim Cook warned investors today that weak iPhone sales could translate into revenue shortfalls in the billions of dollars.
Cook blames the expected revenue drop on fewer-than-expected iPhone upgrades and weakened demand in China.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote in a letter published on Business Wire. “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 revenues on rocky road
Cook cited a number of factors that create a perfect storm that effects profits. Those factors include the staggered launch of the iPhone XS line compared to the more affordable iPhone XR and trade tension between the U.S. and China.
Cook also tried to allay nervousness among investors, citing expected “revenue records” for services, the growth of the Apple Watch and Air Pods, and double-digit revenues thanks to the MacBook Air, Mac mini and new iPad Pro.
He also said Apple will launch a few initiatives to stimulate iPhone sales, including easy trade-ins of phones in Apple Stores, more financing plans and greater help with the transfer of data from old to new phones.
“As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business,” he said. “We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability, and creativity, and to emerge better as a result.
“Most importantly, we are confident and excited about our pipeline of future products and services. Apple innovates like no other company on earth, and we are not taking our foot off the gas.”
Source: The Verge