Apple admits it is going to miss iPhone sales
- Author: Wendy Palmer Jan 05, 2019,
Jan 05, 2019, 0:19
"Apple stock is now at a crossroads", said a research note Thursday from Gene Munster and Will Thompson of the investment firm Loup Ventures.
Apple's revised Q1 guidance forecast is dropping by up to $9 billion in revenue compared to its original estimate. Secondly, Tim Cook thinks the weakening USA dollar is to blame for Apple's lowered profits, as well as the company's flagship device, the iPhone, experiences its worst sales run in recent memory due to competition from overseas. These analysts said that while Apple's services business jumped 27.5% year over year to $10.8 billion in December, they "are quite concerned that Services growth is going to slow meaningfully beginning in the March" quarter.
Apple's dour revenue warning was not entirely a surprise. In November, the company said it would stop reporting unit sales of iPhones, iPads and Macs beginning in fiscal 2019.
"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook wrote in his letter.
The German case, part of a global patent spat between the two companies, is Qualcomm's third major effort to secure a ban on iPhones over patent-infringement allegations after similar moves in the United States and China. "Until it changes this pricing strategy, it is unlikely to see market share growth and will most likely see a gradual contraction as iPhone users upgrade at slower rates", said Richardson. Universal Display Corp. declined 3.5 per cent and Lumentum Holdings Inc. tumbled 8.7 per cent. Shares of USA retailers that sell Apple products were also weak on the news.
On Wednesday, the iPhone maker said it expected revenue of about $84 billion (£67 billion) for the last three months of 2018, down from a forecast of at least $89 billion.
The stock has fallen about 30 per cent since Cook first said in a November earnings call that the company might experience lower sales over the Christmas period.
"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", Cook added in his letter.
Peter Richardson, a research director at Hong Kong-based Counterpoint Research, said it was hard to see a catalyst that would help Apple recover lost ground in China. There are likely many others, too, that will be forced to announce lower-than-expected earnings, according to the chairman of the White House Council of Economic Advisers.