After issuing a revised earnings forecast on Wednesday, Apple CEO Tim Cook sat down to discuss the anticipated revenue decline and a variety of related topics, including rising U.S.-China diplomatic tensions.
Cook discusses everything from iPhone subsidies to Apple’s trade-in program in his 13-minute interview with CNBC, but he manages to put the unexpected forecast cut in context.
Wednesday, Cook released a note informing investors that revenue for the first quarter of 2019 will fall short of the November estimate by billions of dollars. Quarterly results will not be released until January 29, but Apple’s revised guidance indicates that iPhone will face significant challenges in the future.
In the interview, Cook reiterated what he told investors and blamed China for the iPhone’s poor performance. Apple’s top executives noted a slowdown in China’s vital economy heading into the second half of 2018, a situation made worse by recent U.S. trade disputes.
“It is evident that the economy began to decline in the second half. I believe that trade tensions between the United States and China exert additional pressure on China’s economy “Cook said.
In addition, Cook attributed a portion of the blame for weak quarterly results to supply constraints that impacted an impressively diverse lineup of newly introduced products in the preceding months. “We experienced some supply constraints throughout the quarter. A record number of new products were introduced during the quarter. New iPad Pros and new watches. The majority of these were limited during the quarter “he stated throughout the interview.
During the holiday quarter, Apple’s services and wearables categories reached new heights. Services, Apple’s fastest-growing product category over the past year, has performed exceptionally well over the past three months.
“This is incredibly exciting for us because so many of the items broke records,” said Cook. “Apple Music broke a record, Apple Pay broke a record, our search ad product from the App Store broke a record, and iCloud broke a record.”
Moving on from the iPhone question, Cook addressed the increasing unpredictability surrounding China, specifically his travel safety.
Meng Wanzhou, a Huawei executive, was recently arrested in Canada at the request of the United States, prompting many to wonder if China would target American executives in retaliation. Cook, however, does not appear to share this apprehension.
“I was there just last October. I will return later this quarter. To tell the truth, I am not even considering it “he said.
The increasing pressure has Apple on the defensive, and the company appears to be attempting to allay employee and external fears. Thursday, Cook will address these internal concerns as part of a town hall meeting, according to a Bloomberg report.