In an uncharacteristic move, Apple has issued revised investor earnings guidance as a result of fewer iPhone upgrades and weak sales in the Chinese market, according to a press release from the tech giant.
Apple now forecasts $84 billion USD ($114 billion CAD) in revenue for the first quarter of 2019, a number that already sits below estimates of $91.5 billion ($124 billion CAD) based on BES data from Refinitiv, according to Reuters. In total, this means that Apple dropped its Q1 2019 revenue forecast by $9 billion ($12 billion CAD).
Further, Apple expects a gross margin of about 38 percent, along with operating expenses of approximately $8.7 billion ($11.8 billion), according to a press release from the company.
The Cupertino, California-based company initially predicted revenue between $89 billion ($121 billion CAD) and $93 billion ($126 billion CAD) for this quarter.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” said Apple CEO Tim Cook in a recent press release.
“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.”
Cook went on to say that sales of the Apple Watch Series 4, iPad Pro, AirPods and MacBook Air “were constrained much or all of the quarter.”
He also stated that iPhone upgrades were not as strong as the company expected “in some developed markets.”
Cook said that the launch timing of the iPhone XS and XS Max when compared to the iPhone X, as well as the strength of the U.S. dollar, resulted in the phone costing more in specific regions like Canada.
Regarding Apple’s difficulties with sales specifically in China, the company blames the country’s slow economic growth during the second half of 2018.
Apple’s shares halted prior to the press release regarding the earnings guidance was sent out, with the value sitting at $157.92 USD.