Apple lowered its sales and financial guidance for the first quarter as sales of its flagship iPhone products fail to keep pace with expectations. Apple blames most of the anticipated shortcoming on slowing sales in China.
Apple stock prices tumbled sharply as the company issued a rare downward guidance for its first-quarter sales. CEO Tim Cook blames the lower revenue forecast on slowing sales of its iPhone and Apple Watch in China.
The Lowdown: Apple conceded that its first-quarter sales will not meet previously stated guidance as sales of its flagship iPhone products and other wearables slow, most notably in China. News of the revised forecast caused the company’s stock to tumble 7 percent, as investors and market watchers worry that Apple and other smartphone manufacturers have seen an end to hyper-growth.
The Details: While conceding that iPhone and other product sales are not what they anticipated, Apple says almost 100 percent of the sales shortfall is in China. The ongoing trade war with the United States and general economic slowdown are behind the decrease in China sales, Apple says.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” said Apple CEO Tim Cook. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue
The Impact: The impact on the channel and solution providers is minimal, as Apple operates one of the tightest closed channels in the market. However, Apple’s China woes could be a harbinger of things to come for other technology companies that depend on the massive Asian market for growth. Slower growth in Asia could mean belt-tightening in technology budgets around the world.
Background: Anticipation for Apple missing its forecast has been brewing for months as many analysts and observers fear that the smartphone market has reached saturation — or peak sales — levels. If that’s the case, it means Apple, Samsung, and other device manufacturers will see growth and profitability slow.
The Buzz: “Apple’s warning, while rare and a temporary shock to its shares, is probably more alarming for the wider