With iPhone sales slowdown, Apple cuts revenue forecast: Here's Tim Cook's Memo to Employees
Apple, the Cupertino based smartphone giant has slashed its revenue expectations for the first quarter of 2019 to $84 billion from the previous estimate of $89 – $93 billion approx. Tim Cook, the CEO of Apple in a letter to his investors wrote that the company knew that the first quarter would see an impact by macroeconomic factors as well as some ‘Apple-specific’ issues.
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In the first quarter of 2018, Apple had reported a revenue of $88.3 billion, which was 13 per cent more than the year-ago quarter that also was an all-time record.
There are many factors that affected the sales, as Apple acknowledged that one of its biggest reason was the Chinese market, seeing its economy beginning to decline. The other factor Apple is facing is the fiercer competition in the Chinese market from companies like Huawei, Vivo, Oppo and Xiaomi. Moreso, the Chinese consumer preferred to spend less for a complete flagship product in comparison to the extensively priced new iPhone's.
Never the less, it's not all that bad for the company even though the iPhone sales aren’t doing as well as previous years. This is because the company shows ever-increasing revenue sources outside of the iPhone as Apple cites “all-time record revenues from Services, Wearables, and Mac”, which includes Apple Music and iCloud as well.
Apple surely is feeling the heat as it gears into 2019 and to push its business, Apple needs a new approach and has to come up with new strategies for 2019.
Read the full memo below that was obtained by Bloomberg News, in which Tim Cook has expressed his disappointment after Apple cut its revenue outlook for the first time in almost two decades.
Tim has also invited employees to a rare all-hands meeting on Thursday, where he is likely to share more details about the quarter and take questions.
"Team,
Happy New Year — I hope everyone was able to rest and enjoy time with loved ones over the holidays.
This afternoon we issued a letter to Apple investors explaining that we are revising our financial guidance for the holiday quarter. I encourage you to read it. As you will see, our revenue shortfall in Q1 is from iPhone, primarily in Greater China.
While we are disappointed to be falling short of our quarterly revenue goal, our fiscal first quarter was also a record setter for revenue from Services, Wearables and the Mac. iPad revenue grew double-digits over the year-ago quarter, and iPhone activations in the US and Canada set new Christmas Day records. We expect to set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam. Our worldwide installed base of active devices also hit a new all-time high, reflecting the loyalty of our customers and their appreciation for the work you do.
We are tremendously proud of the innovations we're delivering to our customers with iPhone XR, iPhone XS and iPhone XS Max. These are, without a doubt, the best iPhones we've ever made. We did not set a new record for iPhone sales in Q1, however, due to a number of factors — some macroeconomic, and some specific to Apple and the smartphone industry.
External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple's mission — delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger.
With that in mind, please join me for an all-hands meeting on Thursday morning at 9:30 am PT. Be sure to check AppleWeb for more details. Due to construction at Apple Park, we'll be gathering at Town Hall on the Infinite Loop campus. Join us there in person, or via live stream through AppleWeb. I'll have more details about the quarter, and I'm looking forward to your thoughts and questions.
Hope to see you there.
Tim"
