Today's talk about the supposed disappointing performance of the new iPhones on the market. Well, now in the most ?supposed?: no one less than Tim Cook in person, he told Apple investors that ?lower iPhone sales? had an impact on the company's finances and should continue to do so at least over the next few months.
The statement came in a letter to investors, recently published on the company's website, in which Cook reviews the forecasts made at the last financial results conference. Notably, Apple significantly reduced its revenue forecast for the first fiscal quarter of 2019 in November; the company had forecast revenue between $ 89 and $ 93 billion for the period; now, that estimate is in the $ 84 billion.
Other important figures remain stable: the company still predicts a gross margin of approximately 38%, operating expenses of approximately US $ 8.7 billion and a tax rate of approximately 16.5%. The index of income / (expenses) also rose considerably between the forecasts for November and the updated ones, from US $ 300 million to approximately US $ 550 million.
Cook recalls that these figures are only forecasts and the definitive results will be released only at the end of the month more precisely, on the day January 29, a tuesday, s 8 pm (due to the summer time in Braslia), but the company found it beneficial to disclose this preliminary information to investors.
The CEO points out a number of factors for the decline in revenues, focused especially on the iPhone. Among them, Cook talks about the different launch strategy of 2018 (when the most expensive iPhones were launched first, leaving the most accessible model the XR last), the strengthening of the dollar that made smartphone prices rise in foreign markets and challenges in emerging markets, such as China, which contributed most to the drop in revenue from the iPhone.
"These and other factors have resulted in fewer iPhone upgrades than we had anticipated," wrote the CEO.
Some points in Cook's letter are noteworthy: among the reasons to justify the drop in demand for iPhones, the executive cited the battery exchange program at reduced prices, according to him, consumers ?took advantage? of the initiative to change only the batteries of your devices and not the devices as a whole. The statement, of course, did not go well.
Not sure Cook should have listed this as a reason for slower than expected iPhone sales. Sure makes it sound like the old way of handling battery degradation was intended to drive people to buy new phones. pic.twitter.com/rd4pl7vqOy
– John Gruber (@gruber) January 2, 2019
I don't know if Cook should have listed this as a reason for sub-expected iPhone sales. It sounds as if the old way of dealing with battery degradation was intended to get people to buy new devices.
Despite the drop in revenue forecasts, Cook pointed out several recent positive results from Apple. He cited Ma's active device base, which reached a new record with over 100 million activations in the past 12 months; revenues ?disregarding the iPhone? with a 19% growth year-over-year and the popularity of wearable devices and the service segment were also listed.
Yikes! Back in November Apple felt that the holiday season would be its best quarter ever. In the cold light of 2019, it turns out that it's going to be down $ 4B year over year, and most of the reason is iPhone sales.https: //t.co/aNOqIT5rip
– Jason Snell (@jsnell) January 2, 2019
To be clear, this is still Apple's second largest quarter of all time. Apple is a huge generator of revenue and profit, and will remain so for many years.
All of this is notable because of the iPhone, and apparently because even Apple was taken by surprise.
That said, the iPhone is still Apple's profit and growth engine, responsible for nearly two-thirds of the company's financial operations. When the iPhone falls, therefore, the company as a whole falls. And how it fell: minutes after the letter was published, the $ AAPL dropped about 7%; at the moment, post-closing of today's NASDAQ sessions, each is valued at $ 146.50.
Cook already spoke a little CNBC:
EXCLUSIVE: After cutting Q1 expectations, Apple CEO Tim Cook tells CNBC that the shortfall is primarily in Greater China as trade tensions put pressure on the Chinese economy https://t.co/iOf79ebo17 pic.twitter.com/Lm7Wyp1VOX
– CNBC Now (@CNBCnow) January 2, 2019
The speculation season is now open to how Cook and the company will react to the storm. Today's letter is basically an admission that the strategy of throwing iPhones prices up is not working, and it will be interesting to see what Cupertino's next moves will be to reverse this scenario. Opinions?