Apple Inc (NASDAQ:AAPL) shares took a plunge in early trade on Thursday following news after-hours that indicated the tech giant had a not-so-happy new year, with its CEO Tim Cook warning in a letter to investors that the company's fiscal first-quarter revenue would be weaker than previously expected.
In the letter, published by the company after the New York close on Wednesday, Cook wrote that a number of factors contributed: timing of iPhone launches, foreign exchange headwinds, economic weaknesses and an "unprecedented number of new products to ramp," culminating in “fewer iPhone upgrades than we had anticipated."
Apple is now forecasting revenue of approximately $84 billion, down from guidance announced back in November of between $89 billion and $93 billion. This is its first revenue guidance cut since Cook took over as CEO in 2011.
China currently a pain point
China was highlighted as a particular pain point for Apple's first quarter results, with Cook adding that revenue in China accounts for “over 100 percent of our year-over-year worldwide revenue decline.”
Cook said the economic environment in China has been affected by rising trade tensions with the United States, with traffic to retail stores in China declining during the quarter.
"Despite these challenges, we believe that our business in China has a bright future. The iOS developer community in China is among the most innovative, creative and vibrant in the world," said Cook.
In early New York trade on Thursday, Apple shares were 9% lower at $143.61.
UBS cuts target, estimates
In a note to clients reacting to the news, analysts at UBS reduced their target price for Apple shares to $180, down from $210 previously, while retaining a 'buy' rating on the stock after cutting their estimates for the group.
The Swiss bank decreased their revenues and earnings per share forecasts for Apple to around $262 billion and $12.03 per share for full-year 2019, down from $276bn and $13.05 respectively, and to around $273bn and $13.42 per share for full-year 2020, down from around $287bn and $14.43.
They said they now model 2019 iPhone unit sales of around 185 million, down 10% year-on-year, with modest growth in 2020 to around 187 million units.
-- Adds Thursday share price, analyst comment --