Following Apple reducing its revenue forecast for the first quarter of 2019, Apple CEO Tim Cook also revealed that the iPhone experienced record activations on Christmas Day in Canada and the United States in an internal memo.
In the memo, Cook also says that the tech giant experienced record revenue in the “Services,” “Wearables” and “Mac” categories. Further, he states that Apple expects to “set all-time revenue records” in “key markets,” including the U.S., Canada and Mexico.
Despite these record activation numbers, Apple issued a rare earnings guidance revision, lowering the company’s earnings forecast by a total of $9 billion USD (roughly $12 billion CAD).
Apple now predicts $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.
The Cupertino, California-based company initially predicted revenue between $89 billion ($121 billion CAD) and $93 billion ($126 billion CAD) for this quarter.
Cook blamed the revised earnings estimate on lower sales in China, as well as the fact that sales of the Apple Watch Series 4, iPad Pro, AirPods and MacBook Air “were constrained much or all of the quarter.”
Cook is planning to hold an all-hands meeting with Apple employees at 9:30am PT (12:30pm ET). Below is a copy of the text included in an internal memo Cook sent out to Apple employees, courtesy of MacRumors:
Happy New Year — I hope everyone was able to rest and enjoy time with loved ones over the holidays.
This afternoon we issued a letter to Apple investors explaining that we are revising our financial guidance for the holiday quarter. I encourage you to read it. As you will see, our revenue shortfall in Q1 is from iPhone, primarily in Greater China.
While we are disappointed to be falling short of our quarterly revenue goal, our fiscal first quarter was also a record setter for revenue from Services, Wearables and the Mac. iPad revenue grew double-digits over the year-ago quarter, and iPhone activations in the U.S. and Canada set new Christmas Day records. We expect to set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam. Our worldwide installed base of active devices also hit a new all-time high, reflecting the loyalty of our customers and their appreciation for the work you do.
We are tremendously proud of the innovations we’re delivering to our customers with iPhone XR, iPhone XS and iPhone XS Max. These are, without a doubt, the best iPhones we’ve ever made. We did not set a new record for iPhone sales in Q1, however, due to a number of factors — some macroeconomic, and some specific to Apple and the smartphone industry.
External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple’s mission — delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger.
With that in mind, please join me for an all-hands meeting on Thursday morning at 9:30 a.m. PT. Be sure to check AppleWeb for more details. Due to construction at Apple Park, we’ll be gathering at Town Hall on the Infinite Loop campus. Join us there in person, or via live stream through AppleWeb. I’ll have more details about the quarter, and I’m looking forward to your thoughts and questions.
Hope to see you there.