Apple’s share price has taken a tumble after the company reduced its sales forecast by almost $US5bn on the back of weaker than expected iPhone sales in the latest quarter.
In the letter to Apple shareholders, CEO Tim Cook cited several reasons for the slump including the timing of the iPhone launches and the strong US dollar creating “foreign-exchange headwinds”.
But most of the revenue shortfall for the iPhone occurred in Greater China while other Apple categories including services, Mac, iPad and Apple Watch grew by almost 19 per cent year-on-year in that region.
The Apple boss puts the iPhone slump down to China’s slowing economy.
Cook’s letter to investors suggested iPhone sales had been impacted by rising trade tensions with the United States, fewer carrier subsidies and customers taking advantage of cheaper iPhone battery replacements to extend the life of their current device.
Other pundits say the recent success of brands like Huawei has become a factor for the iPhone downturn in China.
Apple shares fell by as much as 7.5 per cent after the market panicked upon hearing the news of the companies revised revenue projections down from $US89bn down to $US84bn – the first decline since 2016.
Yesterday’s share plunge wiped $55bn off the company’s value.
But Apple CEO Tim Cook remains upbeat about the company’s future.
“As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business,” he said in the letter to investors.
“We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result.
“Most importantly, we are confident and excited about our pipeline of future products and services. Apple innovates like no other company on earth, and we are not taking our foot off the gas.
“Expectations are high for Apple because they should be. We are committed to exceeding those expectations every day.
“That has always been the Apple way, and it always will be.”