FILE – This Oct. 22, 2018, file photo shows the iPhone 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 earlier projections. CEO Tim Cook made the announcement after the market closed Wednesday, Jan 2, 2019. (AP Photo/Richard Drew, File)
SAN FRANCISCO (AP) — Apple acknowledged that demand for iPhones is waning, confirming investor fears that the company’s most profitable product has lost some of its luster.
The reckoning came in a letter from Apple CEO Tim Cook to the company’s shareholders released after the stock market closed Wednesday.
Cook said Apple’s revenue for the October-December quarter — including the crucial holiday shopping season — will fall well below the company’s earlier projections and those of analysts, whose estimates sway the stock market.
Apple now expects revenue of $84 billion for the period. Analysts polled by FactSet had expected Apple’s revenue to be about 9 percent higher — $91.3 billion. The official results are scheduled to be released Jan. 29.
Cook traced most of the revenue drop to China, where the economy has been slowing and Apple has faced tougher competition from home-team smartphone makers such as Huawei and Xiaomi. President Donald Trump has also raised new tensions between the U.S. and China by imposing tariffs on more than $200 billion in goods, although so far the iPhone hasn’t been affected directly.
China’s “economy began to slow there for the second half,” Cook said during an interview with CNBC on Wednesday afternoon. “The trade tensions between the United States and China put additional pressure on their economy.”
Cook also acknowledged that