In his letter, Cook blamed the earlier launch timing of the iPhone XS and XS Max compared to the iPhone X, the strength of the USA dollar, supply constraints due to the number of new products Apple released in the fall, and overall economic weakness in some markets. Cook also that Chinese consumers may have elected not to buy iPhones because Apple is an American company, instead opting to support the firm's Chinese competitors.
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. Some of the company's iPhones have passed the $1,000 mark while Chinese brands look to fill the mass market.
The CEO would go on to point to the ongoing trade war between China and the Trump administration as further hurting its sales, claiming that "mounting uncertainty" about the economy in China was keeping people out of its stores.
Apple stopped disclosing unit sales reports for its phones in November, which Wall Street immediately took as the tech giant attempting to hide a downturn in sales. That led Apple to aggressively market the iPhone XR on its website for $449, about $300 less than its official sticker price.
Cook's letter rattled investors, with analysts calling it a "bombshell".
Apple halted after-hours trading of its shares briefly on Wednesday afternoon to announce to shareholders that it had a worse-than-expected holiday quarter.
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Despite these challenges, Cook said, "we believe that our business in China has a bright future".
"In some developed markets, iPhone upgrades also were not as strong as we thought they would be", Cook said in his letter.
In a letter to investors on Wednesday, chief executive Tim Cook said the firm's sales problems were primarily in its Greater China region, which includes Hong Kong and Taiwan and accounts for nearly 20 percent of its revenue.
While President Donald Trump's trade war with China isn't helping Apple and other US technology companies, Ives believes Apple miscalculated by continuing to roll out high-priced phones in China, creating an opening for rivals with less costly alternatives that still worked well. FedEx Corp., Starbucks Corp., Tiffany & Co. and Daimler AG are also finding it harder to sell their wares in the world's second-largest economy. After the company confirmed that it slowed down iPhones as their batteries aged, Apple apologized to customers and discounted out-of-warranty battery replacements from $79 to $29.
European markets opened lower on Thursday.
Apple now expects revenue of $84bn (€74bn) for the fiscal quarter running from October through December.
Business Insider reports that the NY law firm Bernstein Liebhard has begun to attempt to gather support from Apple investors for a class-action lawsuit against the tech giant over their failure to warn investors about the lack of iPhone demand.