Apple (AAPL) unexpectedly slashed its revenue forecast for the fiscal first quarter of 2019, citing weakness in its key market in China and lower-than-anticipated iPhone revenue.
The company said in a filing released after market close Wednesday that it now sees first quarter revenue of about $84 billion, from $89 billion to $93 billion anticipated previously.
Trading was halted for Apple shares at about 4:25 p.m. ET in advance of the release of the announcement. The stock declined 8.49% to $144.51 per share when trading resumed 25 minutes later, hitting the lowest level since July 2017.
In the filing, Apple CEO Tim Cook attributed the reduced guidance to weakness in emerging markets and in Greater China. For the fiscal fourth quarter of 2018, about 18% of Apple’s revenue came from China.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook said in a statement. “In fact, most of our revenue shortfall to our guidance, and over 100% of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
While weaker sales in China and other emerging markets contributed to the “vast majority of the year-over-year iPhone revenue decline,” in some developed markets, iPhone upgrades also came in weaker-than-expected, Cook said.
“We believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, U.S. dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements,” Cook said.
Aside from the revenue forecast reduction, other items remain broadly in line with Apple’s previously issued guidance, based on the most recent statement. The company said it expects gross margins of 38%, operating expenses of $8.7 billion, other income/(expense) of $550 million and a tax rate of 16.5% before discrete items for the fiscal first quarter of 2019.
The share price hit following Wednesday’s announcement extends a rocky several months for the tech stock, which has taken a beating since Apple last reported quarterly earnings in November. Apple shares fell 29% since reporting quarterly results November 1 through market close on Monday.
In November, Apple CFO Luca Maestri said that the company would no longer break out unit sales numbers for its iPhone, iPad and Macs starting in fiscal 2019. The announcement raised concerns of weakened demand for the company’s flagship devices and sparked a slew of analyst downgrades to Apple’s stock. For the fiscal fourth quarter of 2018, the company sold 46.9 million iPhones, or flat from the year-ago quarter. Meanwhile, iPad unit sales declined 6% versus the same period in 2017, while Mac unit sales slipped 2%.
Shares of Apple suppliers also slumped following Wednesday’s quarterly sales reduction. Shares of chipmakers Qorvo (QRVO), Lumentum Holdings (LITE) and Skyworks Solutions (SWKS) each declined more than 5% in extended trading Wednesday.
Apple is expected to report results for the fiscal first quarter of 2019 after market close on January 29.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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