Apple Warns of Weak First Quarter 2019 Earnings in Light of ‘Fewer iPhone Upgrades Than we Had Anticipated’ [Updated]

There have been plenty of rumblings that Apple hasn’t been selling a lot of iPhones through the holiday season. And now the company’s CEO may be setting the record straight.

Tim Cook today sent out a letter to investors, warning them of weaker first-quarter earnings as 2019 kicks off. The reason? According to Cook, it’s because of “fewer iPhone upgrades than we had anticipated”. The primary concern for Apple, according to the letter, is centered around greater China. However, Cook also points to a weak presence “in some developed markets”, where “iPhone upgrades also were not as strong as we thought they would be”.

Cook is also ready to hand out reasons like candy, too. That includes an “earlier release date” for the iPhone XS and XS Max compared to the iPhone X (which could make sense, because it wasn’t quite a year between the launch timing), the overall strength of the U.S. dollar, and even due to the number of different devices that Apple launched in the fall of 2018.

“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.”

A bit of good news, though, as Apple says other important divisions within the company are still seeing growth, and, in fact, have risen by as much as 19 percent year-over-year:

“Also, as I mentioned earlier, revenue outside of our iPhone business grew by almost 19 percent year-over-year, including all-time record revenue from Services, Wearables and Mac. Our non-iPhone businesses have less exposure to emerging markets, and the vast majority of Services revenue is related to the size of the installed base, not current period sales.

Services generated over $10.8 billion in revenue during the quarter, growing to a new quarterly record in every geographic segment, and we are on track to achieve our goal of doubling the size of this business from 2016 to 2020.

Wearables grew by almost 50 percent year-over-year, as Apple Watch and AirPods were wildly popular among holiday shoppers; launches of MacBook Air and Mac mini powered the Mac to year-over-year revenue growth and the launch of the new iPad Pro drove iPad to year-over-year double-digit revenue growth.”

However, the nitty gritty details in that regard will have to wait and be doled out by Apple later this year when the company gets around to announcing its fiscal first quarter 2019 earnings (which will happen on Tuesday, January 29).

That’s not all, though. Another reason for the weakened Q1 expectations? Apple’s cheaper battery replacement program!

“…and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.”

For its part, Apple has already confirmed it will no longer be announcing any unit sales for the iPhone, Mac, or iPad from this point on. In light of Cook’s announcement today, one can imagine this won’t go over too well with investors — or the stock market for that matter.

Who had money down that Apple was going to start 2019 stumbling out of the gate?

Update: In an unprecedented move, Tim Cook will be hosting an all-hands meeting with Apple employees tomorrow where he would be answering their questions about today’s announcement.

[via Apple]