Looks like Tim Cook is finding it tough to deal with the changing smartphone scenario as Apple is failing to keep its iPhone sales performance as impressive as in the past. In the recent development, Apple has further cut down the company revenue estimation for the first fiscal quarter ended on December 31, 2018. In the recent note released by Tim Cook, CEO – Apple Inc. (NASDAQ:AAPL), the company is aiming for $84 billion in revenue – nearly 7% – 8% lesser than what the company estimated in November last year.
So, what has caused the lower than estimated sales of iPhone in fiscal Q1 2019?
Tim Cook blames fewer iPhone upgrades! Tim Cook stated that ‘economic weakness in the few emerging markets‘ and ‘foreign exchange headwinds‘ from the strong US dollar caused the damages. Tim, however, didn’t disclose the drop in revenue from iPhone sales alone.
Largely blaming Greater China for the weak iPhone sales in fiscal Q1 2019, Tim Cook stated that the drop in iPhone revenue for the fiscal quarter is due to the poor sales performance of iPhone in the region. Cook also revealed that it’s not the Greater China alone which is solely accounted for the revenue shortfall. The fewer iPhone upgrades in other emerging marketers also contributed to the declining iPhone sales revenue.
“While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements,” Cook said.
But, it’s not iPhone alone that has done the damages for Apple. The supply-chain constraints for AirPods, Apple Watch Series 4, and recently launched MacBook Air 4 has also affected the company’s revenue estimation in the fiscal Q1 2019.
To balance the situation, Tim Cook also tried to portray the positive scenario for the fiscal Q1 2019. He claimed that in the fiscal Q1 2019, Apple recorded a lot many positive results, including an install base of active Apple devices up to 100 million units in 12 months, and over $10.8 billion in revenue coming from services. He also added the company is well tuned to its goal to double its services revenue between 2016 and 2020.
The outstanding sales performance of Apple’s wearable devices was also highlighted by Cook. He claimed that revenue from Wearable devices are up nearly 50% Y-o-Y and the company is all set to score record revenue in many countries including the U.S., Canada, Germany, Italy, Spain, Netherlands, and South Korea.
While the final results of Apple for the first fiscal 2019 is are still a month away, but the recent note by Tim Cook has clearly indicated that it’s going to be a tough year for Apple. To set the expectations of its investors and market analysts in the right direction Tim Cook has apparently setting up expectations in the right direction to avoid any harsh criticism post-announcement of quarter results.
In the last 3 months, Apple’s lost nearly 25% in its valuation due to the constant fall in its share value.
All and all, Apple would be throwing a mixed bag to its investors and analysts, and it would be interesting to see how the Wall Street is going to respond to Tim Cook’s justifications behind the subtle performance of Apple in the beginning quarter of its fiscal 2019.