Apple predicts slow first quarter

Despite product diversifiction, Apple has failed to offset the drop in revenue . Courtesy

One of the most valuable tech companies, Apple surprised most with the unveiling its revenue anticipation of the first quarter of 2019 at just about $84bn from $89bn as previously predicted.

This means that it will have fallen short by almost 5 per cent of its revenue from the same period for last year. Making it the first year -on- year quarterly decline since 2016.

The company’s shares sank with more than 7 per cent as the news pumped in.

According  to the preliminary report which was released on Wednesday by the firm’s CEO Tim Cook to investors.

The company blamed its poor performance to the recent macroeconomic developments especially in the emerging markets particularly China and the appreciation of the dollar value driven by the recent increase in the interest rate by the Federal Reserve putting it at 2.5 per cent, the highest since the 2008 financial crisis.

The slow growth of the Chinese economy, much affected by the ongoing trade dispute with the USA, saw goods valued at $253bn affected.

This has also had an unprecedented effect on the Chinese economy.

Another factor, according to the report is that the Chinese have failed to upgrade to the latest version by the firm.

Some may blame the slowed growth projections for reasons such as production of long lasting battery smart phones leading customers to hesitate to upgrade their gadgets.

The firm is also allegedly to have failed to anticipate the negative impact of the quarterly increase in interest by the American Central Bank on the Chinese consumer confidence.

The Chinese currency has lost its value against the dollar to over 6 per cent last year. This means that it became very expensive for the Chinese market to respond to the hiked price of the latest company offerings.

Recently the company has diversified to different services and hardware like Apple pay, Apple watch, Apple music and iCloud.

With that the firm has seen diversification increase across all segments to a value of $10.8bn with wearables growing at 50 per cent.

 But all this innovation has failed to replace the lion contribution of the conquering iPhone.

The increased pressure from other players in the industry such as Huawei one of the firms from China of the company has also led to revenue shortfall.

According to recent reports Huawei outstripped Apple phone sales by over 50m gadgets.

Cook however still believes that the company will be able to strengthen its flexibility, adaptability and creativity to re-examine its approach capitalizing on its 100,000 employees to recover growth overtime, his report read.

editorial@newtimes.co.rw

 

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