Tim Cook pens letter to Apple investors informing them of lower earnings guidance

Apple CEO Tim Cook wrote a letter to Apple investors today informing them of adjustments to the company's earnings expectations. Citing fewer iPhone upgrades and headwinds from currency exchange and weak sales in China, the letter aims to clarify investor expectations.

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

• 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."

Cook adds that, "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."

Other factors leading to lower earnings are also becaus eof supply constraints for AirPods and recently released products like the iPad Pro, the Apple Watch Series 4 and the all-new MacBook Air. 

"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," the CEO said.