Apple stock plummets 8% on news of grim Q1 2019 outlook

Jeannie Matthews
January 4, 2019

The company forecast $84 billion in revenue for the first quarter, which is below analysts' estimate of $91.5 billion, according to IBES data from Refinitiv.

Apple issued a press release on Wednesday to announce it would be lowering revenue guidance for its first fiscal quarter, which ended in December.

Although non-phone categories, including the Mac, Apple Watch and iPad, grew 19 per cent worldwide, Cook noted that more than 100 per cent of the company's fourth quarter year-over-year revenue decline occurred due a drop in Chinese sales of iPhones and other Apple product.

Cook said other factors will also pull down Apple's revenue, including the timing of its iPhone launches past year and a strong dollar that means lower revenues when converted to USA currency. He also said Apple is seeing fewer iPhone upgrades than expected, which partially accounted for the new guidance. A year prior, revenues came to $88.29 billion.

Despite all assurances from its CEO that the company will overcome the shrinking iPhone revenue it witnessed lately because of economic deceleration in emerging markets, Apple really needs to make some changes in its business strategy given that the iPhone provides Cupertino with the largest share of its revenue.

As Hassett spoke to Poppy Harlow on CNN, he was asked about how the Dow is down by more than 500 points today after Apple's shares dropped by 9% amid a weak sales forecast. In late December, the promotional program for the new models went live in China, adding one major perk: users in China cannot only trade in their old iPhones, but also Android phones made by Apple's major competitors in China, including Huawei, OPPO and Xiaomi. Apple will be keen to prove that its disappointing quarterly earnings are not part of a wider trend. Others are simply taking advantage of low-cost new plan for replacing iPhone batteries, which cut the price from 429 to $79.

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"Although the company had some quarters over the past 20 years that missed Street expectations, in the modern iPhone era last night was clearly Apple's darkest day", he wrote in a note Thursday.

The announcement late on Wednesday sent Apple shares plunging.

Apple's shares halted prior to the press release regarding the earnings guidance was sent out, with the value sitting at $157.92 United States dollars. China is Apple's third-largest market after the U.S. and Europe.

Apple previously told investors to expect revenue between $US89 billion and $US93 billion.

In the meantime, Apple's older iPhone 7 and iPhone 8 models remain available for consumers who don't want to break the bank for a new iPhone.

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