BREAKING NEWS A woman is dead after a car crash in Huntington County Sunday evening. Full Story

Read Tim Cook's full letter to investors about Apple sales

Apple chief executive Tim Cook ...

Posted: Jan 3, 2019 7:33 AM
Updated: Jan 3, 2019 7:33 AM

Apple chief executive Tim Cook warned investors Wednesday that the company is lowering expectations for its first-quarter performance in 2019, and he cautioned that investors should expect lower sales from the holiday quarter primarily because of a slowdown in holiday sales.

Today we are revising our guidance for Apple's fiscal 2019 first quarter, which ended on December 29. We now expect the following:

Apple Inc

Asia

Business and industry sectors

Business, economy and trade

China

Companies

Company activities and management

Company earnings

Consumer electronics

Consumer products

Continents and regions

East Asia

Economic development

Electronics

Emerging markets

Financial performance and reports

Financial results

Mobile and cellular telephones

Mobile technology

Personal computers

Smartphones

Tablet computers

Technology

Trade and development

Banking, finance and investments

Business figures

Financial markets and investing

Tim Cook

Revenue of approximately $84 billion

Gross margin of approximately 38 percent

Operating expenses of approximately $8.7 billion

Other income/(expense) of approximately $550 million

Tax rate of approximately 16.5 percent before discrete items

We expect the number of shares used in computing diluted EPS to be approximately 4.77 billion.

Based on these estimates, our revenue will be lower than our original guidance for the quarter, with other items remaining broadly in line with our guidance.

While it will be a number of weeks before we complete and report our final results, we wanted to get some preliminary information to you now. Our final results may differ somewhat from these preliminary estimates.

When we discussed our Q1 guidance with you about 60 days ago, we knew the first quarter would be impacted by both macroeconomic and Apple-specific factors. Based on our best estimates of how these would play out, we predicted that we would report slight revenue growth year-over-year for the quarter. As you may recall, we discussed four factors:

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.

Second, we knew the strong US dollar would create foreign exchange headwinds and forecasted this would reduce our revenue growth by about 200 basis points as compared to the previous year. This also played out broadly in line with our expectations.

Third, 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.

Fourth, we expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected.

In addition, these and other factors resulted in fewer iPhone upgrades than we had anticipated.

These last two points have led us to reduce our revenue guidance. I'd like to go a bit deeper on both.

Emerging Market Challenges

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. 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.

China's economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China's smartphone market has been particularly sharp.

Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world. Our products enjoy a strong following among customers, with a very high level of engagement and satisfaction. Our results in China include a new record for Services revenue, and our installed base of devices grew over the last year. We are proud to participate in the Chinese marketplace.

iPhone

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.

Many Positive Results in the December Quarter

While it's disappointing to revise our guidance, our performance in many areas showed remarkable strength in spite of these challenges.

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.

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.

We also expect to set all-time revenue records in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands and Korea. And, while we saw challenges in some emerging markets, others set records, including Mexico, Poland, Malaysia and Vietnam.

Finally, we also expect to report a new all-time record for Apple's earnings per share.

Looking Ahead

Our profitability and cash flow generation are strong, and we expect to exit the quarter with approximately $130 billion in net cash. As we have stated before, we plan to become net-cash neutral over time.

As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business. We manage Apple for the long term, and Apple has always used periods of adversity to re-examine our approach, to take advantage of our culture of flexibility, adaptability and creativity, and to emerge better as a result.

Most importantly, we are confident and excited about our pipeline of future products and services. Apple innovates like no other company on earth, and we are not taking our foot off the gas.

We can't change macroeconomic conditions, but we are undertaking and accelerating other initiatives to improve our results. One such initiative is making it simple to trade in a phone in our stores, finance the purchase over time, and get help transferring data from the current to the new phone. This is not only great for the environment, it is great for the customer, as their existing phone acts as a subsidy for their new phone, and it is great for developers, as it can help grow our installed base.

This is one of a number of steps we are taking to respond. We can make these adjustments because Apple's strength is in our resilience, the talent and creativity of our team, and the deeply held passion for the work we do every day.

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.

Tim

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 947918

Reported Deaths: 15377
CountyCasesDeaths
Marion1291181990
Lake635721103
Allen53899761
Hamilton44082449
St. Joseph42122590
Elkhart33803491
Vanderburgh30574449
Tippecanoe26915251
Johnson23727418
Hendricks22410342
Porter21832347
Clark17562231
Madison17492385
Vigo16302285
Monroe14545191
LaPorte14389239
Delaware14183222
Howard13971273
Kosciusko11498135
Hancock10935166
Warrick10737178
Bartholomew10635170
Floyd10514208
Wayne10077226
Grant9213204
Morgan8928160
Boone8463111
Dubois7791123
Dearborn769490
Henry7691133
Noble7466101
Marshall7409128
Cass7219118
Lawrence7026153
Shelby6647111
Jackson661386
Gibson6190107
Harrison609386
Huntington604495
Montgomery5853105
DeKalb581091
Knox5535104
Miami548888
Putnam543268
Clinton537465
Whitley529354
Steuben501768
Wabash488692
Jasper483861
Jefferson474492
Ripley457777
Adams446068
Daviess4231108
Scott409165
Clay394957
White393858
Greene393392
Wells389884
Decatur388797
Fayette378578
Posey362341
Jennings356056
Washington334747
LaGrange325175
Spencer321136
Fountain318455
Randolph317190
Sullivan309449
Owen287064
Starke282864
Fulton280454
Orange277859
Jay257038
Perry254152
Carroll245229
Franklin242838
Rush237030
Vermillion235050
Parke221420
Tipton212055
Pike211740
Blackford170534
Pulaski168551
Crawford147318
Newton145845
Benton143916
Brown135846
Martin130217
Switzerland126910
Warren115616
Union98511
Ohio80511
Unassigned0482

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1385749

Reported Deaths: 21820
CountyCasesDeaths
Franklin1538881574
Cuyahoga1358332341
Hamilton987081326
Montgomery679671161
Summit568451051
Lucas51531869
Butler48000663
Stark42232983
Lorain32046539
Warren30404338
Mahoning27463643
Clermont25990297
Lake24809422
Delaware22566147
Licking20767246
Fairfield20730223
Greene20611275
Trumbull20257516
Medina20074290
Clark18170332
Richland16680236
Portage16389231
Wood15926209
Allen14333261
Miami14018261
Muskingum12927155
Wayne12185244
Columbiana11980242
Tuscarawas11204271
Marion10908150
Pickaway10606129
Scioto10531127
Erie9864171
Ross9612177
Lawrence8934125
Hancock8603143
Ashtabula8474187
Geauga8251156
Belmont8236188
Jefferson7691175
Huron7537131
Union742651
Washington7380126
Athens709365
Sandusky6963135
Darke6875137
Knox6812122
Seneca6519137
Ashland6051115
Auglaize595388
Shelby5820104
Brown575372
Mercer565190
Defiance5564101
Crawford5563117
Madison551071
Highland549282
Fulton542583
Clinton533781
Logan518687
Preble5102111
Putnam4900107
Guernsey484364
Williams468982
Perry462254
Champaign454264
Ottawa442484
Jackson434563
Pike398345
Morrow396451
Coshocton391969
Fayette383753
Adams369275
Hardin366170
Gallia355458
Holmes3321111
Henry329869
Van Wert320771
Hocking310770
Wyandot285458
Carroll266352
Paulding246443
Meigs221742
Monroe192749
Noble174142
Morgan170029
Harrison160741
Vinton141319
Unassigned05
Fort Wayne
Partly Cloudy
60° wxIcon
Hi: 80° Lo: 49°
Feels Like: 60°
Angola
Partly Cloudy
63° wxIcon
Hi: 78° Lo: 48°
Feels Like: 63°
Huntington
Partly Cloudy
60° wxIcon
Hi: 79° Lo: 47°
Feels Like: 60°
Decatur
Partly Cloudy
60° wxIcon
Hi: 79° Lo: 48°
Feels Like: 60°
Van Wert
Partly Cloudy
63° wxIcon
Hi: 79° Lo: 47°
Feels Like: 63°
Monday is another nice and breezy day with warmer temperatures.
WFFT Radar
WFFT Temperatures
WFFT National

Community Events