Tough year for Apple: The company's CEO, Tim Cook, published a letter to investors, warning of lower-than-expected profits in the first quarter of 2019, citing that there were "fewer iPhone upgrades than we expected."
The weakened demand came mainly from China, according to Cook, although he said that overall the trend for “upgrades was not as strong as we thought it would be.”.
In his letter, Cook attempts to explain the lower profits by highlighting: the release schedule of the iPhone XS and XS Max compared to the iPhone X, the price of the US dollar, supply constraints due to the number of new products Apple released in the Fall, and overall economic weakness in some markets.
But the basic issue remains simple: people simply aren't buying as many new iPhones as Apple hopes.
According to Mr. Cook's letter,
“Lower iPhone revenue, primarily in China, is driving our revenue shortfall.” Cook says that Apple’s other divisions actually saw 19 percent growth over the year, but the truth is that the iPhone is Apple’s core business, and if Apple can’t sell enough of them, the whole business suffers.
In an interview with CNBC, Cook said of the deficit that “trade tensions between the United States and China are putting additional pressure on their economy,” which is leading to fewer customers.
Overall, the forecast for the deficit for the first quarter of the year is up to $9 billion, compared to its initial estimate.
Apple stock fell nearly 10%.
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