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Revenue down: Apple CEO Tim Cook revises guidance for fiscal 2019 Q1

In an open letter to investors, Apple CEO Tim Cook has revised the company’s guidance for fiscal 2019 Q1 – with around $5 billion cut from previous revenue projections.

The figures anticipated (below, and as published on Apple’s Newsroom), which won’t be officially released until the end of the month, have been impacted by a mixture of anticipated and unpredictable factors:

  • Revenue of approximately $84 billion
  • Gross margin of approximately 38 percent
  • Operating expenses of approximately $8.7 billion
  • Other income/(expense) of approximately $550 million
  • Tax rate of approximately 16.5 percent before discrete items

Based on these estimates,” wrote Cook, in his official letter to investors. “Our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.”

Overall revenue had been expected to be between $89 billion and $93 billion, but issues including a struggle in the Chinese market, and consumers enticed by Apple’s now expired $29 battery replacement offer, have impacted overall figures.

However, other factors, including the strength of the US dollar, had been anticipated to impact sales, particularly in emerging markets such as Greater China. In an interview with CNBC, Cook remained optimistic about the future trade relationship between the United States and China, citing economic slowdown in the country as a primary reason for lower-than expected projections.

Despite this rare downturn, Apple still expect to set all-time revenue records in up to 11 countries – including at home in the United States – and across 4 continents. Cook also anticipates that Apple will exit this challenging first quarter of 2019 with around $130 billion in net cash.

Reassuringly, Cook signed off with a resoundingly, and typically positive outlook: “Expectations are high for Apple because they should be. We are committed to exceeding those expectations every day. That has always been the Apple way, and it always will be.”

Apple will publish the official figures after January 29, when Cook will host a conference call with investors and look ahead to the rest of 2019.

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