Apple blames China as it cuts forecast
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Apple has warned investors about its growth in the most recent quarter, citing weaker sales in China.
In an unexpected disclosure, the iPhone maker said it expected revenue of about $84bn (£67bn) in the three months to 29 December.
That is down from its November forecast of at least $89bn – a prediction that had already disappointed investors.
The firm’s shares have already fallen more than 28% since it offered investors that November outlook.
In a letter to investors on Wednesday, chief executive Tim Cook said the firm’s miss was due primarily to its Greater China region, which includes Hong Kong and Taiwan and accounts for almost 20% of its revenue.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” he said.
“In fact, most of our revenue shortfall to our guidance, and over 100% of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
However, he added that developed markets saw troubles as well, as fewer customers than expected chose to upgrade to Apple’s newest, most expensive phones.
‘Mounting uncertainty’
Apple shares sank more than 6% in after-hours trade on Wednesday, as the warning appeared to confirm doubts about the firm’s prospects that have gripped investors in recent months.
Production cuts by major suppliers had led to worries that the firm’s newest phones were not gaining traction among buyers.
The firm had also warned investors in November that a rising dollar and economic weakness in some overseas markets would be likely to hurt its sales in the last three months of the year.
Analysts highlighted Apple as vulnerable in the US-China trade fight, fearing that the tensions would cause Chinese buyers to sour towards US brands or might trigger new tariffs on its products, many of which are made in China.
On Wednesday, Apple said the trade tensions had contributed to an economic slowdown in China and hurt consumer sentiment.
“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,” Mr Cook wrote in the letter.
He added that Apple was taking steps to make it easier for customers to trade in their phones and said other parts of the firm’s business, including services, remained strong.
“While it’s disappointing to revise our guidance, our performance in many areas showed remarkable strength in spite of these challenges,” he said.
