Apple Inc. cut its fiscal 2019 first-quarter revenue forecast on Jan. 2 due to weaker than expected iPhone sales, primarily in Greater China.
In a public letter to investors, CEO Tim Cook said the company now expects revenue of $84 billion for the quarter ended Dec. 29, 2018, down from its earlier guidance of $89 billion to $93 billion.
Apple also expects operating expenses of approximately $8.7 billion, at the lower end of its previously guided range between $8.7 billion and $8.8 billion.
"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Cook said in the letter, adding that "lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline."
The latest announcement comes after Apple in November 2018 warned of weaker than expected sales for the all-important holiday season. Apple reportedly cut production orders for all three of the iPhone models that it unveiled in September. The iPhone XS and iPhone XS Max, which retail for $999 and $1,099, respectively, began shipping in September. The cheaper iPhone XR, starting at $749, did not ship until late October.
In December 2018, several Wall Street analysts cut their estimates for Apple iPhone sales. Citi Research analyst William Yang said in a Dec. 28, 2018, research note that the lower estimate was primarily due to the weak outlook for the iPhone XS Max, the most expensive of Apple's new phone, Reuters reported.
"The material cut in our forecasts is driven by our view that 2018 iPhone is entering a destocking phase, which does not bode well for the supply chain," said Yang.