Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.
One thing Cook didn't mention in his letter is Apple's declining market share in China and the rise of domestic rivals like Huawei and Oppo. Apple said the smartphone market in China has been contracting, and that's true.
Cook told CNBC that Apple products have not been targeted by the Chinese government, though some consumers may have elected not to buy an iPhone or other Apple device because it is an American company.
Cook lowered the company's revenue guidance for the three months that ended December 29, to about $84 billion from as much as $93 billion. The company previously projected $89 billion-to-$93 billion in revenue. This has now been revised to $84 billion. The news sent Apple's stock plunging after hours. Cook said that most of the revenue shortfall to the company's initial guidance "occurred in greater China across iPhone, Mac and iPad".
He, however, clarified that all other "categories outside of iPhone (Services, Mac, iPad, Wearables, Home, Accessories) combined to grow nearly 19 percent year-over-year".
"And, while we saw challenges in some emerging markets, others set records, including Mexico, Poland, Malaysia and Vietnam", he said. It will also have taken a chunk out of confidence in the global economy. On Thursday it was also announced that Apple is likely to remove some iPhones from stores in Germany, as Qualcomm moves to enforce an earlier court order banning the sale of some iPhone models in the country.
"Apple has itself to blame".
At the moment, Apple is trading at US$157.92 which is a significant 32% drop from its record high of US$233.47 in October 2018. It didn't have the latest and greatest specs to satisfy the hardcore Apple fanboy, but at $750, it is still a fairly expensive upgrade for consumers used to that baseline $650 for a new iPhone.
Another user concurred. "I just bought Pixel 3 instead! iPhone prices are ridiculous", he said.
Tax rate of approximately 16.5 percent before discrete itemsWhen we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Apple needs to fix it soon!