Apple CEO Tim Cook today shared a letter to his company's investors to warn that Apple is revising its guidance for the fiscal Q1 2019 quarter. The Cupertino firm now expects revenue of $84 billion, down from the estimate of $89 billion to $93 billion that it previously expected to see.
As for what's causing the change, Apple blames fewer iPhone upgrades than it had anticipated and economic weakness in some emerging markets. "Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline," Cook explains in his letter, adding that emerging markets accounted for much of the year-over-year iPhone revenue decline, upgrades were also not as strong as Apple expected in some developed markets.
Cook believes that consumers adjusting to a world with fewer carrier subsidies played a role in fewer iPhone upgrades taking place, as well as customers taking advantage of Apple's low-price iPhone battery replacement program. U.S. dollar strength-related prices increases was another factor, says Cook.
Apple's CEO tries to end the letter on a positive note, saying that Apple's installed base of active devices hit an all-time high, growing by more than 100 million units in 12 months. Cook also says that wearables grew by almost 50 percent year-over-year, with Apple Watch and AirPods being "wildly popular among holiday shoppers".
Apple will announce its full Q1 results on January 29. In the mean time, you can read Cook's full letter to investors here.
EXCLUSIVE: After cutting Q1 expectations, Apple CEO Tim Cook tells CNBC that the shortfall is primarily in Greater China as trade tensions put pressure on the Chinese economy https://t.co/iOf79ebo17 pic.twitter.com/Lm7Wyp1VOX
— CNBC Now (@CNBCnow) January 2, 2019