Apple's once-unflappable iPhone revenue is officially in retreat with a 15% shortfall year-over-year, according to its latest earnings statement today, so CEO Tim Cook is about to explain what went wrong in a conference call.
Here's what we know so far about this developing Apple story. The company's total revenue was $84.3 billion (about £67b, AU$120b) for the last three quarters ending on December 29. For almost any other company but Apple, this would be an impressive number.
However, for Apple, this is a rare earnings shortfall of $9 billion (about £7.14b, AU$12.9b) compared to what it had previously forecast for the quarter: a high of $93 billion (about £74b, AU$133b).
Apple earnings highlights and breakdown
Each quarter, Apple forecasts high and low numbers it expects for the next quarter's earnings. Apple is notoriously conservative with these numbers and hasn't missed in its predictions since 2002, almost 17 years ago.
Here's the breakdown from Apple's official earnings report:
- iPhone: $51.9m (Q4 2018) vs. $ 61.1m (Q4 2017)
- Mac: $7.4M (Q4 2018) vs. $6.8M (Q4 2017)
- iPad: $6.7M (Q4 2018) vs. $5.7M (Q4 2017)
- Wearables, Home and Accessories: $7.3M (Q4 2018) vs. $5.4M (Q4 2017)
- Services: $10.8M (Q4 2018) vs. $9.1M (Q4 2017)
- Total net sales: $84.3M (Q4 2018) vs. $ 88.2M (Q4 2017)
Apple did warn us about at the top of this year of the impending shortfall. It blamed China's economy and its discounted iPhone battery replacement program for the lack of smartphone upgrades in 2019.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Cook today's earnings press release.
Highlighting Apple's new areas of growth
While iPhone revenue declined 15% from the prior year, Apple made sure to mention that other products and services grew 19% year-over-year.
It specifically broke out services revenue, which had an all-time high of $10.9 billion, or up 19% year-over-year. Apple is investing heavily in services, with a streaming platform rumored to be due out in April.
Apple also said that its Mac and Wearables businesses (meaning Apple Watch and AirPods) had all-time high revenue, growing 9 percent and 33 percent, respectively. iPad revenue grew 17%.