Apple stock trading halted, lowers 1Q 2019 earnings due to poor iPhone sales

Image: Apple

Earlier this afternoon, Apple halted trading of its AAPL stock, which sent it plunging 7%, or about $10 per share, during after-hours trading. This led to Apple CEO Tim Cook to issue a statement to investors. Here’s what we know.

Just moments before Apple Chief Executive Officer Timothy D. Cook published a letter to investors, shares of AAPL stock plunged to a 52-week low at roughly 7.48%, or about $11.82, to $146.59 per share. At the time of this writing, Apple is currently trading even lower at $146.07.

According to the press release, Tim Cook warned investors about the potential to lose $9 billion dollars due to slowing iPhone sales. Cook cited “fewer iPhone upgrades than we had anticipated.”

Back on November 1st, 2018, Apple published the following guidance for the fiscal 2019 quarter:

fiscal2019-nov1-apple
Image: Apple

Earlier this afternoon, Apple published a revised version of its guidance for the fiscal 2019 quarter:

fiscal2019-jan2-apple
Image: Apple

According to both reports, Apple now expects to lose a reported $9 billion dollars in revenue from the report from 60 days ago.

First, we knew the different timing of our iPhone launches would affect our year-over-year compares. Our top models, iPhone XS and iPhone XS Max, shipped in Q4’18—placing the channel fill and early sales in that quarter, whereas last year iPhone X shipped in Q1’18, placing the channel fill and early sales in the December quarter. We knew this would create a difficult compare for Q1’19, and this played out broadly in line with our expectations,” said Tim Cook in his letter.

Furthermore, Tim Cook also said in the release, “We knew we had an unprecedented number of new products to ramp during the quarter and predicted that supply constraints would gate our sales of certain products during Q1. Again, this also played out broadly in line with our expectations. Sales of Apple Watch Series 4 and iPad Pro were constrained much or all of the quarter. AirPods and MacBook Air were also constrained.”

Tim Cook also cited rising tensions between the United States and China regarding trade. “The trade tensions between the United States and China put additional pressure on their economy,” he said in an interview with CNBC. Furthermore adding in the letter, “Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfalls to our guidance and for much more than our entire year-over-year revenue decline.”

Despite the revision, and stock plunging in after-hours trading, Tim Cook mentioned that many other divisions grew 19% year-over-year, but, iPhone is, and always will be, the core of Apple, and without it, Apple will fail.

iPhone_XR_red-back_09122018
Image: Apple, iPhone Xr led in Christmas Activations

According to multiple sales reports after Christmas, the iPhone Xr led in Christmas activations. “Our installed base of active devices hit a new all-time high—growing by more than 100 million units in 12 months. There are more Apple devices being used than ever before, and it’s a testament to the ongoing loyalty, satisfaction, and engagement of our customers,” said Cook.

Tim Cook ended his letter to investors with this: “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 announce the rest of its holiday earning results on January 29th.

Update 1/02/18, 11:30 PM EST: The article was updated to reflect the addition of when Apple will announce the rest of its holiday earning results.

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Sid Ramirez

I usually write stuff, mostly Apple. Photographer, film major, environmentalist, techie.

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