As part of a letter from Tim Cook to Apple investors share today, the Cupertino tech giant has lowered its guidance for the first fiscal quarter of 2019, blaming “fewer iPhone upgrades” than anticipated as a factor that has caused Apple’s Q1 2019 expected revenue to drop from between $89 billion and $93 billion to approximately $84 billion, and gross margins between 38 percent and 38.5 percent to approximately 38 percent.
Despite the lowered predictions, Apple, says Cook, is confident in its business and the “pipeline of future products and services.”, with the letter sharing that Apple has more active devices than ever before, with the company on track to double the size of its Services business from 2016 to 2020.
The letter was shared publicly on Apple.com, available to read in full here. Alongside the official acknowledgement of “fewer iPhone upgrades”, Apple also notes several other reasons for the company’s new Q1 2019 forecast, including economic weakness, production constants, US dollar strength-related price increases and even customers taking advantage of significantly reduced pricing for iPhone battery replacements.
Apple Watch Series 4, iPad Pro, MacBook Air, and AirPods were constrained during the holiday season, leading to an inability to keep up with demand. – Within an interview with CNBC, where Tim Cook discussed the letter, Cook revealed the shortfall is over 100 percent from iPhone and primarily from Greater China due to a slowing economy during the second half of 2018.
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