Apple issues rare earnings guidance revision, lowers forecast by $9 billion

Apple issues rare earnings guidance revision, lowers forecast by $9 billion

It now expects revenue of $84 billion, well below the prior range of $89 billion to $94 billion that it projected in November.

Still, Mr Cook was careful to point out that smartphone sales overall in China have contracted.

Cook also acknowledged that consumers in other markets aren't buying as numerous latest iPhones, released last fall, as Apple had anticipated. The company also saw "fewer iPhone upgrades than we had anticipated", he said. This is also the fourth quarter of the year for 2018 - but, again, the first financial quarter for Apple for 2019.

The company blamed an economic downturn in China as it revealed that sales declined at the end of 2018.

A shock revenue warning from Apple has stoked fresh fears about trade tensions and spending in the world's second largest economy.

"In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad", he wrote.

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While Apple's previous guidance had factored in a lot of potential headwinds that could affect revenue for the quarter, two particular points had a greater than expected impact on the company. In November, Apple unexpectedly announced that it would no longer disclose how many iPhones it ships each quarter, ending a long-running practice. It didn't have the latest and greatest specs to satisfy the hardcore Apple fanboy, but at $750, it is still a fairly expensive upgrade for consumers used to that baseline $650 for a new iPhone. This isn't unprecedented, but it might come as a bit of a shock to those investors that've seen quarter after quarter of big iPhone sales and revenue aplenty across the board for the company.

Trading in the company's shares were temporarily halted as Tim Cook, Apple's chief executive, issued a letter to shareholders explaining the reason for the change. Universal Display Corp. declined 3.5 per cent and Lumentum Holdings Inc. tumbled 8.7 per cent. Shares of US retailers that sell Apple products were also weak on the news. "The trade tensions between the United States and China put additional pressure on their economy". Along with slowed growth there in the second half of past year, Cook said that the "economic environment in China has been further impacted by rising trade tensions with the United States".

Apple Inc. plans to hold off until at least 2020 before offering an iPhone that can connect to 5G networks, according to people familiar with its plans.

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Those difficulties are compounded by a slowing Chinese economy. Cook's letter noted that services revenue was $10.8 billion in the quarter and the business should double from 2016 to 2020. The tech-driven Nasdaq composite index now stands 18 per cent down from its record closing high reached in August.

Still, Cook pointed out that sales of several Apple products are growing, including its wearables business - devices like the Apple Watch - while the company's burgeoning services business continues to expand.

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