Apple has fell victim to the Asian contagion, according to CEO Tim Cook as sales in China plummeted.
Shares of the iPhone maker cratered nearly 8 percent in extended trading Wednesday — knocking some $50 billion off the market cap after the company took the unusual step of cutting its revenue guidance.
In a letter to investors, Cook said that Apple expects to report $84 billion in revenue during its next earnings report — it previously forecasted $91 billion.
Cook placed the blame on “both macroeconomic and Apple-specific factors,” and said that the iPhone maker failed to “foresee the magnitude of the economic deceleration” in emerging markets. The CEO never cited the $1,500 price point for the most expensive model.
Indeed, Cook said that “over 100 percent” of Apple’s worldwide revenue decline “occurred in Greater China across iPhone, Mac and iPad.”
Cook also said that Apple hurt its bottom line when it slashed the price of iPhone battery replacements early last year after it was caught red-handed slowing down older iPhones to preserve their aging batteries.
Consumers, he said, are taking advantage of the “significantly reduced pricing” to extend the lives of their current phones and avoid an upgrade.
“While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be,” Cook said.
Though Cook did not acknowledge the eye-watering prices of Apple’s new iPhone XS and XS Max — which start at $999 and top out at $1,449 — as a contributing factor to Apple’s woes, he did point a finger at “US dollar strength-related price increases.”
He added that the ongoing extinction of carrier subsidies — which reduced the sticker shock of expensive handsets — contributed to the poor performance.
Sales of Apple’s cheaper iPhone XR have also been a thorn in Apple’s side since it hit stores in late October. The Cupertino, Calif.-based company has seen its stock drop more than 30 percent as numerous parts and chip suppliers for the iPhone have slashed sales forecasts.
The tech giant has gone as far as assigning members of its marketing team to work full-time on boosting sales, and has upped the amount it is willing to pay for devices traded in toward the purchase of a new iPhone, according to a report earlier this month.
As recently as last week, Apple was blasting out emails to shoppers that advertised the XR at $449 — provided customers trade in an older device.
Shares of Apple were down 7.4 percent in extended trading, at $146.
Credit: Source link