On Wednesday, Jan. 2, Apple issued a press release to announce it would be lowering revenue guidance for its first fiscal quarter, which ended in December.
Apple stock also halted in after-hours trading just minutes prior to the announcement.
Apple CEO Tim Cook wrote a letter to investors, which was issued alongside the press release, and he also spoke to CNBC to answer questions about the quarter and revised guidance.
Apple shares were down about 7 percent when trading resumed 20 minutes later, and the company lowered revenue guidance to $84 billion, down from the $89 billion to $93 billion it had previously projected.
Apple blamed a variety of factors for the lowered guidance, including a weakening economy in China and lower-than-expected iPhone revenue.
“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,” Cook said in the letter.
Cook added that upgrades to new iPhone models in other countries were “not as strong as we thought they would be.”
Cook’s letter said fewer carrier subsidies, price increases and cheaper battery replacements caused the weak iPhone upgrades for the quarter.
“Some customers taking advantage of significantly reduced pricing for iPhone battery replacements,” Cook said.
Despite all of the reasons Apple gave for its lower earnings guidance, the core issue remains simple: people just aren’t buying as many new iPhones as Apple anticipated.
By: Maytinee Kramer
