Business Corpus: Apple Slashes December-Quarter Sales, Earnings OutlookApple late Wednesday warned investors that its sales and earnings would come in well below its prior guidance, given two months ago. Apple stock was halted, and shares later dropped. The post Apple Slashes December-Quarter Sales, Earnings Outlook appeared first on Investor's Business Daily.

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Apple (AAPL) late Wednesday warned investors that its sales and earnings would come in well below the guidance it gave two months ago. Apple stock plunged after the market close.

For its fiscal first quarter ended Dec. 29, the iPhone maker now expects revenue of about $84 billion. It previously predicted sales of $89 billion to $93 billion, or $91 billion at the midpoint.

Apple now expects a gross profit margin of about 38%, compared with its earlier guidance of 38% to 38.5%. Apple said its operating expenses would be at the low end of its prior guidance range of $8.7 billion to $8.8 billion. It forecast "other income" of $550 million, vs. its earlier outlook of $300 million, given on Nov. 1.

In a letter to investors, Apple Chief Executive Tim Cook blamed the revenue shortfall on macroeconomic factors and disappointing iPhone sales.

Apple Stock Plummets Late

Trading in Apple stock was halted ahead of the company's revised guidance. When trading resumed at 4:50 Eastern time, shares plunged as much as 8.5%. Apple stock was down 7.5% to 146 in recent after-hours action on the stock market today.

The main factors in Apple's lowered revenue guidance were weakness in emerging markets and fewer iPhone upgrades than predicted, Cook said.

"We expected economic weakness in some emerging markets. This turned out to have a significantly greater impact than we had projected," Cook said.

Weakness In Greater China Biggest Factor

Greater China is responsible for most of Apple's revenue shortfall, Cook said.

"China's economy began to slow in the second half of 2018," he said. "The government-reported GDP growth during the September quarter was the second lowest in the last 25 years."

He added, "We believe the economic environment in China has been further impacted by rising trade tensions with the United States."

Greater China and other emerging markets accounted for most of the year-over-year iPhone revenue decline in the December quarter, but iPhone upgrades were weaker than expected in some developed markets as well, Cook said.

"While macroeconomic challenges in some markets were a key contributor to this trend, 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.

Services, Wearables, Macs Post Strong Sales

On the plus side, the December quarter showed some areas of "remarkable strength," Cook said. Those areas include services, wearables and Mac computers, he said.

The Cupertino, Calif.-based company generated more than $10.8 billion in services revenue in the quarter. Apple is on track to achieve its goal of doubling the size of its services business from 2016 to 2020, Cook said.

"Wearables grew by almost 50% year over year, as Apple Watch and AirPods were wildly popular among holiday shoppers," Cook said. "Launches of MacBook Air and Mac Mini powered the Mac to year-over-year revenue growth and the launch of the new iPad Pro drove iPad to year-over-year double-digit revenue growth."

Elsewhere on the stock market, major chip suppliers to Apple also fell in late trading. Broadcom (AVGO) dropped 4.9% in extended trading. Qorvo (QRVO) slid 5.2%. Skyworks Solutions (SWKS) caved 5.8%.

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