I saw that just 2 months ago, Tim Cook had high hopes for the year-end season. He expected revenues to grow 5% relative to the same period in 2017. Turned out it was 5% down, year-over-year.
I don't think China sales was an excuse. The weakness there is real, and cannot be hidden. Looks like what caught Apple by surprise was the sales decline. I wonder if it was because of China's consumer sentiment. The Chinese are nationalistic, and the trade war may have cause them to buy more domestic products, particularly with the recent Huawei fiasco.
Many US companies were expecting growth to come from sales in China. They may be disappointed in the months ahead.
I acknowledged sales in China are an issue but am wondering aloud if Apple has made a pricing misjudgment with the latest iPhones. From Tim Cook’s letter iPhone sales are missing their targets. When facing declining demand most companies look to reduce price. Apple introduced models that were more expensive. Either they expect this soft demand to be temporary, or they have a unique pricing strategy that isn’t clear - at least to me.
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. In fact, categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19 percent year-over-year.
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.
https://www.apple.com/newsroom/2019/01/letter-from-tim-cook-to-apple-investors/