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Apple’s Q1 struggles: Cook lowers earnings expectations

Apple has taken the unusual step of revising its earnings expectations ahead of the Q1 earnings call due at the end of January.

It feels like a way to temper expectations to soften the blow of lower-than-expected earnings over the past three months. CEO Tim Cook says this is due to a variety of factors, including the timing of product releases, supply constraints for popular products, and broad struggles in the Chinese market.

He doesn’t mention the price increases to the high-end products over the last few years as a determining factor, though he does note that the strength of the US dollar has made less room for profit in overseas markets. It’s also worth remembering that while Apple’s premium products are pricier than ever, this year also saw the release of the highly popular mid-range iPhone XR and a new and vastly improved MacBook Air. The entry-level iPad is also more viable than ever despite the recent release of a second-gen iPad Pro.

Cook also says that Apple’s $29 battery replacement scheme may have encouraged many users to hang onto older iPhones for another year rather than upgrading. This can be seen as a plus for customers, but may have contributed negatively to Apple’s bottom line, which investors aren’t happy about. AAPL stock looks to have taken an overnight hit; we’ll have to wait and see how it fares over the rest of the month and after the official earnings call.

According to Bloomberg, Tim Cook has called an “all-hands meeting” to discuss the repercussions of this earnings revisions amongst other things.