Apple CEO Tim Cook.

Enlarge / Apple CEO Tim Cook. (credit: Drew Angerer/Getty Images)

The beginning of 2019 isn’t proving to be as fruitful as Apple anticipated. CEO Tim Cook released a letter to investors yesterday that revised the company’s guidance for its Q1 2019 performance. Apple now expects a minimum of $84 billion in revenue, down from the $89 billion it projected at the end of the last fiscal year. In response to the news, Apple’s stock fell eight percent in after-hours trading yesterday and remains down since the markets opened today.

So what happened? Cook cited a number of factors, including the timing of the newest iPhone launches and supply constraints across some product categories. The new iPhone XS, XS Max, and XR began shipping in Q4 2018, leading to fewer sales to be counted in the first quarter of 2019. As for supply issues, the letter claims that sales of the Apple Watch Series 4, iPad Pro, AirPods, and the MacBook Air were all constrained during “much or all” of the quarter.

China syndrome

But the biggest problems came from lackluster sales in China and equally disappointing iPhone upgrades. Cook wrote that the “magnitude of the economic deceleration” in Greater China took Apple by surprise, resulting in much of its revenue decline. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad,” Cook wrote in the letter.

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