Apple could lose $9 billion due to weak iPhone sales, admits Tim Cook

By Shaoor Munir on
January 3, 2019
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Apple CEO Tim Cook has published a letter to Apple investors, warning them about lower than expected iPhone sales. Apple is now also dropping its revenue projections by $9 billion to account for these lower sales.

Talking about its revised revenues in its letter to investors, Tim Cook stated following revised projections:

  • Revenue of approximately $84 billion
  • Gross margin of approximately 38 percent
  • Operating expenses of approximately $8.7 billion
  • Other income/(expense) of approximately $550 million
  • Tax rate of approximately 16.5 percent before discrete items

The new projected revenue for Q1 is now $9 billion less than its earlier projection of $93 billion. The reasons given by Tim Cook for this revised projection include weaker sales for iPhone in China due to trade restrictions put in by Donald Trump:

“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfalls to our guidance and for much more than our entire year-over-year revenue decline. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.”

It’s no secret that iPhone sales are down, not only in the China region, but overall people have been less eager to jump on the iPhone XS and XR wagon. The reason could be as simple as people not wanting to spill out north of $1,000 for an incremental update, as to something more fundamentally wrong about the design choices that Apple has taken, alienating people who dislike the new notch and gesture navigation system.

The year 2019 is the tock year in the tick-tock cycle usually followed by Apple, so we expect more innovation and drastic improvements for iPhone 11, hopefully, rejuvenating interest in new iPhones released this year.

 
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