With iPhone Selling Little, Tim Cook Blames China Economy
Apple announced on Wednesday that it revised down its earnings forecast for the first quarter of 2019 due in particular to the slowdown in growth in China.
Even with the new year, Apple’s difficult period does not stop. According to rumors and analysis circulated in recent months has long been that the group is not selling as many iPhone as the company would like to sale. In a letter to investors, the number one Apple has revised downward estimates of revenues for the first quarter of the year.
In the letter, the CEO speaks of a cut than expected which could reach up to $9 billion. Initially, the company was expected to raise between $89 billion and $93 billion in the holiday quarter, but now projects revenue of $84 billion.
China to blame?
Tim Cook said in an interview with CNBC that the main reason for this drop-in revenue expectancy has to do with a supposed slowdown in the Chinese economy in the second half of 2018. As a result, the company sold fewer iPhones than expected in mainland China, impacting heavily on overall company results.
“If you look at our results, that decrease is more than 100% result of iPhones sales, primarily in mainland China,” Cook said. He also reports that trade tensions between China and the US may also have impacted China’s smartphone sales.
According to Apple, the adjustment is almost entirely due to what happens in the Chinese area, although Cook has not denied that even in mature markets, updates to the latest iPhone models have occurred in fewer than expected.
“We were expecting economic weakness in several emerging markets, which has had more impact than we expected,” says Tim Cook, adding that most of the downward revision in sales is attributable to sales of iPhone, Mac, and iPad in China.
A few weeks after Huawei’s chief financial officer was arrested in Canada by a warrant issued in the United States, several Chinese companies have begun to apply drastic measures to support the local electronics maker. According to the report, Chinese companies both in and out of the smartphone market have announced that they will help in the purchase of Huawei’s smartphones and apply penalties against employees who purchase iPhones.
From trillion dollar to declining path
Apple won the race and became the first one trillion-dollar company in the world. That happened on August 2 of last year, and since then everything has plummeted. It is true that the situation of the stock market, in general, is not good for the vast majority of companies, but the case of the company based in Cupertino deserves a special analysis.
The results of Apple for Q4 Fiscal 2018 showed that iPhone sales had stalled. Apple sold 46.9 million iPhones for 46.7 million of the previous year, although earning more money in the face of the incessant rise in the price of its models with respect to the average of other years.
At that time, Apple decided to do something that markets did not like too much and that now seems to have an explanation. It was nothing more than communicating that the company would stop breaking down the units sold precisely as it has been doing so far. Some believed the excuses of Tim Cook at the time, but everything seems to be aimed at hiding a reality: sales of the iPhone have fallen.
On the one hand, it talks about the “timing” of the launch of the new iPhone XS and iPhone XS Max that has occurred during Q4 2018 unlike the launch of the iPhone X in Q1 2018. They also talk about the strength of the dollar as a cause of the fall in income abroad.
Tim also spoke of having many products in production and in the market, which causes some punctual supply problems. Finally, they highlight the weakness of the economic markets of emerging countries. For all this, Tim Cook states that they expect fewer iPhone sales than projected.
With the announcement, Apple shares have since been traded contrary to the stock exchange for a few hours. Apple’s full financial report for the quarter ending December should be published in the coming weeks.