CEO Cook issues memo to employees after Apple slashes revenue outlook for the first time in almost two decades

CEO Tim Cook has issued a memo to Apple employees after Apple slashed revenue outlook for the first time in almost two decades. Apple on Wednesday lowered fiscal Q119 (holiday Q418) revenue guidance to $84 billion, down from the $89 to $93 billion the company’s management had previously projected.

Cook also invited employees to a company meeting Thursday in order to share more details about the issues Apple caused and faces. Cook also promised to take questions from employees.

The full memo, verbatim:

Team,

Happy New Year — I hope everyone was able to rest and enjoy time with loved ones over the holidays.

This afternoon we issued a letter to Apple investors explaining that we are revising our financial guidance for the holiday quarter. I encourage you to read it. As you will see, our revenue shortfall in Q1 is from iPhone, primarily in Greater China.

While we are disappointed to be falling short of our quarterly revenue goal, our fiscal first quarter was also a record setter for revenue from Services, Wearables and the Mac. iPad revenue grew double-digits over the year-ago quarter, and iPhone activations in the U.S. and Canada set new Christmas Day records. We expect to set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam. Our worldwide installed base of active devices also hit a new all-time high, reflecting the loyalty of our customers and their appreciation for the work you do.

We are tremendously proud of the innovations we’re delivering to our customers with iPhone XR, iPhone XS and iPhone XS Max. These are, without a doubt, the best iPhones we’ve ever made. We did not set a new record for iPhone sales in Q1, however, due to a number of factors — some macroeconomic, and some specific to Apple and the smartphone industry.

External forces may push us around a bit, but we are not going to use them as an excuse. Nor will we just wait around until they get better. This moment gives us an opportunity to learn and to take action, to focus on our strengths and on Apple’s mission — delivering the best products on earth for our customers and providing them with an unmatched level of service. We manage Apple for the long term, and in challenging times we have always come out stronger.

With that in mind, please join me for an all-hands meeting on Thursday morning at 9:30 a.m. PT. Be sure to check AppleWeb for more details. Due to construction at Apple Park, we’ll be gathering at Town Hall on the Infinite Loop campus. Join us there in person, or via live stream through AppleWeb. I’ll have more details about the quarter, and I’m looking forward to your thoughts and questions.

Hope to see you there.

Tim

MacDailyNews Take: Again, we fervently hope this disaster refocuses the minds in Apple’s C-suite as if Steve Jobs himself were once again standing before them demanding answers, excellence, and timely performance.

SEE ALSO:
Apple’s earnings warning means CEO Tim Cook now has a major credibility problem – January 3, 2019
Loup Ventures: We continue to expect AAPL to outperform the rest of FAANG in 2019 – January 3, 2019
Open thread: Does Apple need new leadership? – January 2, 2019
CEO Tim Cook on why Apple lowered first-quarter revenue forecasts – January 2, 2019
Apple CEO Tim Cook issues public letter to investors, lowers guidance – January 2, 2019

33 Comments

      1. Steve didn’t bet the farm on China. That stupid move belongs to Timmy. Now he’s running around like Balmer in a room full of chairs trying to figure out how to shift the blame.

        1. I notice the only product line Tim talks (or truly cares) about are iPhones and services. No mention of Macs and other screw-ups under his watch. This isn’t the leader for Apple we were looking for.

    1. Bad premise. It isn’t about “fixing” China; it is about being prepared to mitigate the damage.
      Tim Cook put all the eggs in one basket — namely the iPhone.
      When the iPhone loses its luster, Apple tanks.

      1. yes

        as the saying goes “Good generals don’t plan for best case scenarios but what the absolute worse an enemy can do to them”. Tim Cook too busy with ‘other stuff’ like Campus fruit orchards didn’t do it.

        if we want to talk facts:
        — Tim Cook was too complacent to work on a diversified product line.
        Where is the Echo Dot killer? Why isn’t the HomePod ‘A’ chip powered technology in a host of new speaker products for Beats etc ? why is HomeKit basically fading away like the education market? etc.

        Why the slow updates for Macs? Why is the Mac Mini MORE Expensive when PCs are dropping in price? cook last quarter said China was one of the biggest growth areas for Macs, so with Economic Slowdown there his China strategy is to INCREASE the price of the entry level Mac ?

        Why is the marketing for iPhones so sucky. Plenty of people in China and elsewhere are confused over XS and XR and as Jobs who always wanted a streamlined product line has said if you confuse the public they won’t buy. Where is the small form factor iPhone?

        As for Steve Jobs,

        In 10 years Jobs completely renewed the Mac Line from bubble gum iMacs to the Sleek Mac book Air. Changed old Mac Os to OSX , switched Power PC to Intel, created iPod, iTunes, iPhone, App Store, iPad , Apple Retail Stores etc.

        Please note all these are huge money makers, the Watch doesn’t even make a fraction of Mac’s income.

        If Jobs was around there would be so many more product platforms that China problems would be mitigated.

    2. You can “fix” sales in China by focusing on ALL products.

      Maybe an inexpensive “SE” like model would be a good idea just for China and India.

      Certainly, Apple is leaving 5 to 20 Billion PER QUARTER on the table by not updating the Macs in a timely manner. Update the mini, iMac, Pro, and laptops every SIX MONTHS. Make a “corporate box” – a mini with ports, slots and replaceable RAM and SSDs. Hell, make a 17″ laptop. Maked a small business server for files, printing, deployment, email, backup, and small website hosting. 100,000 small businesses with 3 to 10 employees would buy a box like that in two weeks. Wouldn’t it be great to buy a new Mac, connect it to your business’ network and in twenty minutes be ready to go with all your files, settings, applications, and licenses from your old computer? Wouldn’t be great to KNOW all your files are backed up when you disconnect and take your laptop home for the night? Apple could do ALL this TODAY!

      A 9 BILLION dollar shortfall should get someone’s attention. The first lowered guidance in 15 years says the party is over. Time to get to work.

      What I said above can easily replace that 9 bil. easily. There is NO REASON why Apple couldn’t be the largest computer company in the world. None.

  1. He’s remains in denial, finger-pointing everywhere but at himself, at his his exec team, and at his Board.

    He’s wasted years, squandered tens of billions in buybacks (gee, it didn’t slow their stock fall from $230 to $140…), coddled an executive team of lackluster coasters, placed too many eggs in one basket (China, iPhone), and whiffed on multiple growth opportunities like business, cloud, social, digital home, and pro users.

  2. Tim! It is freaking time to ajust your iPhone line and make a iPhone X se, the most affordable iPhone with a small screen for smaller users (India anyone) and go after that lower niche market. Once they are sucked in they usually stay.

    Not everyone like it big! Even some women like smaller performing stuff than the big fat one… So you know now!

    Get to work!

  3. Cook is a lost cause.

    He lived on the vapors of Steve and now with the vapors gone, he’s clueless on what to do and how to move forward.

    His one trick pony with the phone worked for awhile, but people are peeking behind the curtain and there’s nothing there.

    Funny how as iPhones sales drop like a rock, he’s talking about the Mac again. What a walking fool he is.

    1. If Cook leaves then you will really see Apple fall apart – They will never get products to market in the quantities needed and will not have the profit margin they do now. The could get an additional operations manager but they need his supply chain expertise.

  4. The iPhone is going to be treated the same way earlier, more mature, products are now treated. So, whatever basement Apple is currently keeping the “research and development” teams for the iMac, monitors, etc, is going to get a lot more crowded in the near future. I also expect the prime offices will be up for grabs for the services group, and of course for those responsible for the mission critical effort related to memojis, tongue detection, etc.

  5. We don’t need to Tim but his does need to change the strategy.

    iPhone has become ridiculously expensive which means…
    1) people dont buy one at all
    2) people goto the competition
    3) people put off buying an iPhone til much later, skipping generations.

    This is kinda apple’s own downfall.

    1) The best iPhone needs to be back at £500-600 (like every model used to be).
    2) They should stick at three sizes – covering the sizes iPhones used to be, a mid size and larger
    3) Naming needs sorting out – buying an iPhone is confusing. The recent names were desperate and felt stolen from Boeing (8MAX, NG, ERetc)
    4) Colour – apple used to be amazing at this. The iMac was unlike every other grey box out there. The iPhone started a trend but now everything is a black/white/gold glass rectangle. Apple has only used colour in its budget ranges.

    It does the same with Mac.

  6. The phones are so expensive and lack innovation. Apples Flagship iphone XS Max is 1449.00. Throw in tax and an extended warranty and you spend almost 2k for a phone.

    By contrast the flagship Huawei P20 Pro is 717.00. When you deal with India, China, South America price is a super important factor for the average consumer. Of course apple offers cheaper versions but why over pay for a lesser iPhone when you can have a better flagship phone so much cheaper

    … Not to mention the P20 has a better camera then the XS max.
    https://www.dxomark.com

    ………

    Just look at apples web site. The product mix is so confusing. How many different iPhones dose Apple make now. Steve would break stuff if he saw how misguided and clutterd apple’s design and message have become. Remember when the home page had one focus. Remember when apple was more concerned with making great products instead of being social justice police or something.

    Apple lacks vision and leadership. Best bet Huawei has a vision to take over the global smart phone market at any cost. I wonder how much hand-wringing Huawei leadership waste on being sensitive to people feelings vs hiring the best talent and demanding results. I think apple’s leadership vision is to promote diversity of outcome and bask in the self-important glow of their enlightenment.

    Wake up Tim, this is war. You can no longer coast off the past achievements of the people that came before you. Lead to win or step down…. One can only imagine the person that Tim would choose to replace him. Its really sad when you consider what he inherited. I dont think Tim is a bad guy but misguided and not qualified to lead apple.

  7. Apple made Warren Buffett look like a complete idiot for believing in the company. I can’t say I was totally blindsided because almost everyone knew the smartphone market was totally saturated and it was only a matter of time when iPhone sales would hit a wall and start to decline due to so many less expensive Android smartphones being bought in emerging nations.

    It’s just a shame Apple had to be hit the hardest of all major tech stocks despite sitting on over a $100B in cash that could have been used to acquire some decent cloud business to offset iPhone revenue losses. I can’t believe Tim Cook was surprised at this China iPhone outcome unless he was hibernating in his office.

    I blame Apple for putting so much effort into the iPhone as it has gone for naught as nearly everyone has some gripe about it not having enough features and being too expensive. I’m just glad I’m getting my quarterly dividends because Apple stock is quickly being considered as worthless. I wouldn’t have imagined a trillion-dollar company would crash and burn in just a few months. Apple is truly The iPhone Company as everyone considers it to be. Apple lives and dies based on iPhone unit sales.

    1. I don’t think it was Android. IPhone users don’t really care about Android. I believe the wall they hit was the one where people won’t keep paying more and more for iPhones, especially when they don’t deliver a dramatically different experience than the last one. Lump this in with the fact that they are basically a one trick pony, I.e. Apple makes phones, and it doesn’t look good for growth.

      They had effectively told the world they didn’t give a shit about the Mac and tried to push iPads on people. Which did not work.

      They keep talking about services, but I don’t really see any compelling services coming from them.

      It was all in one basket.

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