Apple Inc. shares fell 10% Thursday after the iPhone maker slashed its quarterly revenue forecast for the first time in more than 15 years as it deals with shrinking demand in China and fewer owners upgrading their phones.
Chief Executive Tim Cook said in a letter to investors Wednesday that revenue was going to be about $84 billion for the quarter that ended late last month, a drop of at least $5 billion from the range of $89 billion to $93 billion Apple had been expecting.
“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall,” Mr. Cook wrote.
The surprise cut, unprecedented in the Tim Cook era, renews concerns about demand for the iPhone, which accounts for most of the company’s revenue. It also raises questions about Apple’s prospects in China, which represents nearly 20% of its sales.
The revision rattled investors already concerned about a slowdown in global economic growth. Shares of Apple suppliers dropped: Micron Technology Inc. fell 3%, Cirrus Logic Inc. slid 6.4% and Lumentum Holdings Inc. was down 8.2%.
Apple shares dropped $15.73 Thursday to close at $142.19, their lowest such level since April 2017. The selloff Thursday erased nearly $75 billion in market value, more than Qualcomm Inc., General Electric Co., Morgan Stanley or Caterpillar Inc. Apple, which became the first U.S. company to reach a $1 trillion market capitalization, has lost $428.74 billion in market cap since its peak in October.
Apple’s announcement “will be a defining moment for Cook & Co. for years to come,” Wedbush Securities analysts wrote Thursday, calling the company’s revenue miss “jaw dropping.”
“In the modern iPhone era last night was clearly Apple’s darkest day in our opinion and represents a challenging growth period ahead for the company,” Wedbush analysts wrote. While lowering their price target to $200 from $275, the analysts said they were still bullish on the company and maintained an “outperform” rating.
Mr. Cook specifically called out China’s impact on results and the effect of the trade spat between the U.S. and China, but analysts raised broader concerns over iPhone pricing.
“These disappointing results in China also suggest Apple’s price-hike strategy could encounter similar pushback in other regions especially if we are entering a global economic slowdown,” Jefferies analysts wrote.
The iPhone XR, the lowest-priced model among the three new phones Apple introduced last year, starts at 6,499 yuan ($945). A competing model from Huawei Technologies Co. that also launched last year, the Mate 20, starts at 3,999 yuan.
Write to Allison Prang at allison.prang@wsj.com
