Apple Says Cheap Battery Swaps To Blame For Wonky Sales

Oscar PerryJan 05, 2019

The CEO of Apple, Tim Cook, has issued a letter to Apple's investors to inform them of a change in the company's guidance for its own earnings and gross margin.

The price gap is one reason Huawei surpassed Apple in smartphone sales from April through September a year ago to seize the number two spot behind industry leader Samsung, according to the research firm International Data Corp.

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.

It's too early to say whether the trade-in program will help Apple attract new users.

On Wednesday night Apple cut its quarterly revenue forecast for the first time in 16 years.

Apple CEO Tim Cook said in a letter to shareholders released after markets closed on Wednesday attributed that most of the revenue drop will stem from lower iPhone sales, China's slowing economy and trade tensions between China and the U.S.

Apple's today also announced that the App Store saw record levels of spending over the holidays totaling $1.22bn between Christmas Eve and New Year's Eve.

"We started it primarily because it's great for the environment", Cook told CNBC.

Apple shares sink as iPhone sales figures slashed
Most of the unforeseen drop in sales revenue is a result of economic deceleration in "Greater China", he said in an earnings call. Meanwhile, Apple's installed base of active devices hit a new all-time high, growing by more than 100 million units in 12 months.

Apple's dour revenue warning was not entirely a surprise. These figures apply to the first quarter of fiscal 2019.

"This is not a catastrophe nor is it a sign that Apple is losing its grip on the smartphone market but merely a misjudgment by Apple with regard to how much money people will pay for an iPhone".

Shares of USA -based Apple suppliers and chipmakers including Cirrus Logic Inc CRUS.O , Skyworks Solutions Inc SWKS.O , Analog Devices ADI.O , Broadcom Inc AVGO.O , NXP Semiconductors NV NXPI.O and Micron Technology Inc MU.O all tumbled.

The timing of Apple's announcement blaming its shortcomings partly on President Donald Trump's trade war with China may increase pressure on American officials to ease the tensions quickly.

Apple said Wednesday that demand for iPhones on the market is declining and its revenue guidance for its fiscal 2019 first quarter, which ended on December 29, 2018, was revised downward.

"I think there are a heck of a lot of United States companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China".

China's economy grew at its weakest pace since the financial crisis last quarter as its trade war with the USA added uncertainty to an already rocky environment. These analysts said in a research note that services represent a huge business opportunity for Apple.

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