Apple cuts revenue estimates, blames weak iPhone sales, cheap battery replacements

XS from left iPhone XR and the iPhone XS Max in New York. Apple warns that disappointing iPhone sales will cause a significant drop in its revenue over the crucial holiday season compared to earl

XS from left iPhone XR and the iPhone XS Max in New York. Apple warns that disappointing iPhone sales will cause a significant drop in its revenue over the crucial holiday season compared to earl

In fact, non-iPhone product revenues actually contributed to a 19-percent growth, except in China, where, according to Cook, a cooling-down economy hurt all kinds of Apple products (but still, iPhone the worst by far).

Wednesday was the first time that Apple issued a warning on its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007.

Consequently, this triggered a broader sell-off. The truth remains that the iPhone has always been Apple's core business and if Apple can't sell enough of them, the whole company struggles. "We did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook wrote.

China's economy grew at its weakest pace since the financial crisis last quarter as its trade war with the United States added uncertainty to an already rocky environment.

Consumers can trade in a Huawei's flagship phone Mate 9 PRO with 128 GB storage, for example, for a 720 yuan ($104) credit that they can use on iPhone XS and XR purchases. Cook wrote that slower iPhone sales account for much of the revenue decline in Apple's first fiscal quarter.

On Wednesday, the iPhone maker said it expected revenue of about $84 billion (£67 billion) for the last three months of 2018, down from a forecast of at least $89 billion. The deal required customers to trade in an iPhone 7 Plus, a high-end handset from two years earlier.

Cook said the new iPhone models were released earlier than the flagship iPhone X last year, which created a hard year-over-year comparison.

The CEO attributed much of the company's "shortfall" in its outlook to struggles in China that he pinned on the economy and "rising trade tensions" with the U.S.

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After Apple's first revenue warning in almost 12 years, investors also dumped chipmakers and tech stocks and flocked to perceived safe havens like U.S. Treasuries and the Japanese yen.

But Apple has held firm on its premium pricing strategy in China despite the risk of a slower economy. More maneuvers like this from other companies could significantly impact the revenue Apple gleans from its app store.

"This is just another little tea leaf as to the goings on behind the curtain in China and last night's PMI coming out weaker than people thought", said Kevin Caron, a senior portfolio manager at Washington Crossing Advisors.

"I think there are a heck of a lot of US companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year".

Robert Pavlik, chief investment strategist at SlateStone Wealth in NY said Apple's update "reiterates worries that China and trade issues have not been resolved".

"Our business in China was very strong last quarter", Apple CEO Tim Cook told investors on November 1, citing 16% growth.

Wedbush Securities analyst Daniel Ives described it as "Apple's darkest day during the Cook era", saying: "No one expected China to just fall off a cliff like this".

But the biggest factor, by far, was the cooling economy in China, which is Apple's third largest market after the USA and Europe.

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