×
You will be redirected back to your article in seconds

Apple Reveals It Underestimated Challenges in China, Revises Guidance for Holiday Quarter

Apple revised its guidance for the holiday quarter on Wednesday, with CEO Tim Cook telling investors that the company had underestimated challenges in China. “We did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote in a letter to investors.

As a result, Apple told investors that it expects to generate $84 billion in its fiscal Q1, which ended on Dec. 29. The company had originally projected to bring in $91 billion.

After-hour trading of Apple’s stock was briefly halted pending the announcement. Share prices sank 7% following the revised guidance.

Cook detailed in his investor letter that economic growth in China had been the lowest in 25 years, which apparently hit phone sales particularly hard. He also blamed the ongoing trade war between the U.S. and China for some of the shortfall, writing:

“We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.”

However, the revised guidance also hinted at another problem: The company simply didn’t sell as many iPhones as expected. “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 wrote, adding that all other revenue lines saw a 16% year-over-year growth.

And it wasn’t just China: The company also saw weaker-than-expected demand for its new iPhone models in other markets. “In some developed markets, iPhone upgrades also were not as strong as we thought they would be,” wrote Cook.

Apple generated around 18% of its revenue in China during its fiscal 4th quarter, which ended on Sept. 31. Company executives had been sharply critical of the trade war between the two countries in the past, and Apple warned in a public filing in September that tariffs could ultimately make its products more expensive in the U.S. as well.

“Our concern with these tariffs is that the U.S. will be hardest hit, and that will result in lower U.S. growth and competitiveness and higher prices for U.S. consumers,” the company stated at the time.

More Digital

  • Google Stadia is a Net Neutrality

    Google Stadia is a Net Neutrality Nightmare

    At the Game Developers Conference (GDC) this year, Google announced that it has taken up the long and ever-lengthening dream of the video game streaming service. Meant to replace the hefty, pricey, altogether confounding experience of buying and using various gaming hardware, Google Stadia will run video games on Google’s own hardware in a server [...]

  • crunchyroll logo

    Crunchyroll Raises Subscription Price to $7.99

    AT&T-owned anime subscription video service Crunchyroll is raising its monthly subscription price from $6.95 to $7.99 a month, it announced in an email to members Friday. It’s the service’s first price increase ever, according to a spokesperson. The new pricing will go into effect on May 1 for new subscribers, while existing members will see [...]

  • StyleHaul

    StyleHaul Shuts Down U.S. Operations, Lays Off About 65 Employees

    The axe is falling on StyleHaul: The fashion, beauty and lifestyle digital media and marketing company owned by RTL Group is shuttering U.S. operations, resulting the layoff of around 65 employees. StyleHaul offices in L.A., with about 55 employees, and in New York City, with around 10 staffers, are closing. RTL said StyleHaul’s U.K. operations, [...]

  • Bandsintown Platform Acquires Hypebot, MusicThinkTank

    Bandsintown Platform Acquires Hypebot, MusicThinkTank

    Bandsintown, a leading platform for letting music fans know about upcoming concerts by their favorite artists, has acquired Hypebot, a news site publishing stories about the music industry and technology, and its sister site MusicThinkTank. “I’m proud to share that Hypebot and MusicThinkTank have been acquired by Bandsintown,” wrote Bruce Houghton, the founder of the [...]

  • Vertigo Games Believes ‘Location-Based Virtual Reality’

    Vertigo Games Believes ‘Location-Based Virtual Reality’ Is Future of VR

    As virtual reality becomes more and more available, many developers are looking for new frontiers to expand the experiences offered by the tech. For Netherlands-based Vertigo Games, that next frontier is what they call “location-based virtual reality.” It’s essentially high-quality VR experiences where players aren’t tethered to a PC or even to the confines of [...]

  • GDC 2019: Google's Play For Gaming

    GDC 2019: Google's Play for Gaming Ubiquity, Rise of Ray Tracing, Store Wars

    The Game Developers Conference finished up Friday evening, wrapping one of the most exciting GDCs in recent memory with Google’s splashy entrance into AAA video gaming, the emergence of real-time ray tracing as a compelling technology for film, TV, and games, and the growing war between two global estore powerhouses: Valve’s Steam and the Epic [...]

More From Our Brands

Access exclusive content