Globally Apple Inc, is popular brand in the segment of smart devices. Owing to its premium charges and configuration in countries like India, it is popular as a luxury item and status symbol. However, the recently launched models of iPhone did not garner the expected attention. In a recent statement issued by Tim Cook, CEO of Apple Inc, he informed that there is a reduction in predicted revenue for the quarter.
This is to an extent that the company has announced “lower than accepted” sales and hence resultant revenue reduction. This is owing to the great ongoing trade war between United States and China, which has caused a considerable reduction in overall sales. The letter also stated that the “number of upgrades” from existing users, was very less as compared to the actual expected number. Another factor responsible for this, as mentioned by Tim Cook, is the ease with which older iPhone can be repaired. Availability of cheaper battery replacements to overcome the battery issues due to age of mobile, led to reduced number of upgrades by consumers.
Tim Cook recently mentioned in a letter “though we were expecting challenges in the market, however this extend was not anticipated especially in the region of greater China.” The company has mentioned that revenue for the Q1 has been changed and reduced by a certain value. This is owing to reduced sales and the effects on the overall market. As mentioned in the letter by Tim Cook, the market has been also effected owing to the fewer carrier subsidies ad increased dollar value. However, these admissions have caused investors to be concerned about their investment returns in the upcoming period. Among the various devices like iPads, Smart Watches and other similar devices the iPhone was the leading revenue generator.
Since its launch in the year 2002 this is the first time that Apple Inc, as company has made such an announcement. It has reduced the predicted sales for the product by a considerable amount and has clearly informed the investors too. At the same time, Tim Cook has mentioned that prospects of revenue from other sources like smart watch and services like iCloud, Apple Pay and the App store.
Just before the announcement was made the company’s shares were halted for some time and there was a considerable fall in the price and company’s stock market value. The letter issued by Tim Cook, in the first week of January 2019, caused major doubts among the investors and others.