17 July 2019
Apple is seeing macroeconomic weakness in some emerging markets, says CEO Tim Cook. Photo: Reuters
Apple is seeing macroeconomic weakness in some emerging markets, says CEO Tim Cook. Photo: Reuters

Apple warns on holiday sales, citing emerging market weakness

Apple on Thursday warned that sales for the crucial holiday quarter would likely miss Wall Street expectations, which CEO Tim Cook blamed on weakness in emerging markets and foreign exchange costs, Reuters reports.

The disappointing forecast sent shares of the US tech giant down as much as 7 percent, pushing its market capitalization briefly back below the US$1 trillion level. 

Apple said it expects between US$89 billion and US$93 billion in revenue for its fiscal first quarter ending in December.

The midpoint of US$91 billion came in below Wall Street expectations of US$93 billion.

Cook told Reuters in an interview that Apple is “seeing some macroeconomic weakness in some of the emerging markets.”

He later told investors on a conference call that weak markets included Brazil, India, Russia and Turkey. Sales were flat in the fourth quarter in India, the CEO said.

For the quarter ended in September, Apple brought in US$62.9 billion in revenue and US$2.91 per share in profits, beating expectations of US$61.5 billion and US$2.79, respectively.

The company sold 46.9 million iPhones in the fiscal fourth quarter, missing analyst expectations of 47.5 million units. But the average selling price of iPhones was US$793, well above analyst estimates of US$750.78, according to FactSet.

Cook told Reuters that his caution on holiday sales was in part due to Apple’s earlier-than-normal launch of its top-end iPhone models, the XS and XS Max.

He also said foreign exchange rates would have a US$2 billion negative impact on Apple’s sales forecast.

Apple is unsure whether it can make enough new iPhones, Apple Watches, iPads and Mac models it released in recent weeks, Cook told Reuters. 

But he stressed that Apple is happy with its performance in China, where revenue grew 16 percent to US$11.4 billion, the fifth quarter in a row the company has had double-digit growth in the region.

Apple said revenue from services, which includes iCloud, the App Store and Apple Music, reached US$10 billion, in line with analyst estimates. 

For its full fiscal 2018 ended in September, Apple reported revenue of US$265.6 billion and profits of US$11.91 per share, beating analyst estimates of US$264 billion and US$11.79 per share.

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