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Tim Cook Says iPhone Activations Set New Christmas Day Records in United States and Canada

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In a memo to employees obtained by Bloomberg's Mark Gurman, Apple CEO Tim Cook provided additional commentary about the company's reduced revenue forecast for the first quarter of its 2019 fiscal year.

2018-iphone-trio.jpg

Cook said Apple is "disappointed" that its quarterly revenue will fall up to $9 billion short of its initial guidance, entirely due to the iPhone, but touted revenue records from other product categories including the Mac, services like the App Store and iCloud, and wearables like the Apple Watch and AirPods.

iPhone activations also set new Christmas Day records in the United States and Canada, according to Cook.

In a letter to shareholders on Wednesday, Apple disclosed that its revenue will be lower than its original guidance for the first quarter of its 2019 fiscal year, coming in at approximately $84 billion. Apple originally guided for revenue of $89 billion to $93 billion in the quarter on November 1.

The letter said lower than anticipated iPhone revenue, primarily in Greater China, accounts for the entire shortfall.

In his memo, Cook said "this moment gives us an opportunity to learn and to take action," starting with an all-hands meeting with employees today at 9:30 a.m. Pacific Time at Apple's Town Hall auditorium on its Infinite Loop campus.

The full memo:
Team,

Happy New Year -- I hope everyone was able to rest and enjoy time with loved ones over the holidays.

This afternoon we issued a letter to Apple investors explaining that we are revising our financial guidance for the holiday quarter. I encourage you to read it. As you will see, our revenue shortfall in Q1 is from iPhone, primarily in Greater China.

While we are disappointed to be falling short of our quarterly revenue goal, our fiscal first quarter was also a record setter for revenue from Services, Wearables and the Mac. iPad revenue grew double-digits over the year-ago quarter, and iPhone activations in the U.S. and Canada set new Christmas Day records. We expect to set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam. Our worldwide installed base of active devices also hit a new all-time high, reflecting the loyalty of our customers and their appreciation for the work you do.

We are tremendously proud of the innovations we're delivering to our customers with iPhone XR, iPhone XS and iPhone XS Max. These are, without a doubt, the best iPhones we've ever made. We did not set a new record for iPhone sales in Q1, however, due to a number of factors -- some macroeconomic, and some specific to Apple and the smartphone industry.

External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple's mission -- delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger.

With that in mind, please join me for an all-hands meeting on Thursday morning at 9:30 a.m. PT. Be sure to check AppleWeb for more details. Due to construction at Apple Park, we'll be gathering at Town Hall on the Infinite Loop campus. Join us there in person, or via live stream through AppleWeb. I'll have more details about the quarter, and I'm looking forward to your thoughts and questions.

Hope to see you there.

Tim
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AAPL shares are currently down around eight percent to $145 in pre-market trading following the disappointing news.

Article Link: Tim Cook Says iPhone Activations Set New Christmas Day Records in United States and Canada
 
Article Link
https://www.macrumors.com/2019/01/03/tim-cook-memo-on-1q19-revenue-shortfall/
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Reactions: SoyCapitanSoyCapitan
Apple just can't determine whether it's iPhone XS or Xs ― I've seen both in multiple instances
 
of course it did. i bought all of my kids some iphones and i have a lot of kids. northwest, southwest (not the airline) and eastwest. i got them all the xr. kim said not to spend too much on them. i used one of them to take the selfie in my profile pic. feeling cute but might delete later idk.
 
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Reactions: iop, Oblivious.Robot, GuruZac and 2 others
So maybe just maybe this is really a China problem and not [insert random Apple gripe here]?
 
MacRumors said:
Cook said Apple is "disappointed" that its quarterly revenue will fall up to $9 billion short of its initial guidance, entirely due to the iPhone,
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Let's see how "disappointed" come September.
MacRumors said:
Cook added that "this moment gives us an opportunity to learn and to take action,"
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Translation: We will increase prices to make up for short fall.
 
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MacRumors said:
Cook said Apple is "disappointed" that its quarterly revenue will fall up to $9 billion short of its initial guidance, entirely due to the iPhone
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Well yes, that tends to happen when you carry all your eggs in one basket.
Hopefully this will make Apple, Inc. pay attention to other areas where they can still innovate.
 
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"This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple's mission — delivering the best products on earth for our customers and providing them with an unmatched level of service."

How about the bent iPad Pros, Tim?
 
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Reactions: merkinmuffley
Why not make some cheaper phones for China and India. Set the profit margin on those phones 10% and flood those markets with cheap phones. Use the numbers to your advantage. Since they are not reporting sales numbers anymore, make a killing on the volume at a 10% profit margin.
 
mdatwood said:
Did you even read the letter? They are going to hit revenue records in many markets. They hit a Christmas Day iPhone activation record. Until that changes, why would they drop prices?
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If they did it would only be in China. Making up for the retaliatory tarrifs and decrease in carrier subsidies that just happened to start during the trade war. Many of their main carriers are government owned agencies and removing the ability of people to pay on time has a huge impact. It’s why Apple started their own phone lease program here. While I think most go with the carrier plans, the availability of their own plan keeps the carriers from jumping ship on a whim because of influence from competitors.
 
I'm still finding it hard to buy the "its all China" storyline. China represents approximately 25% of Apple's revenues and for 25% of your revenues to result in a 7% miss on total revenues you'd need far more than "weakness" in sales to be going on, rather, a total decimation of sales. That on top of "record activations" in North America?! Keep in mind that those record activations didn't come from the Xs/Xs Max but for the cheaper iPhone 7 & 8.

I think there's way more that's not being said than is being said.
 
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Rogifan said:
So maybe just maybe this is really a China problem and not [insert random Apple gripe here]?
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China is a big portion of the problem, but he has laid out multiple issues that contributed to the overall decline. To focus on China sort of downplays the entirety of the message. Unfortunately, there was a confluence of issues that manifested at the same time.
 
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