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Tim Cook’s notes for Apple board call
December 17, 2018
BoD call–-privileged and confidential
Will not achieve revenue guidance. Currently expect revenues of $84.5B vs our guidance of $89-93B. Expect GM to be at the low end of our 38-38.5% guidance at 38%.
I take full responsibility.
Shortfall compared to the low of our guidance is $4.5B
-iPhone accounts for essentially all of the miss. We expected to sell at least 70M units and we now believe we will sell 65M. IPhone XR is 4.7M units lower than our guidance. We have also been more promotional than we planned to attempt to counter the demand trends and this impacted our expected ASP.
-From a geo perspective, Greater China accounts for about two thirds of the miss.
From a year over year perspective:
-We are projecting to be down about $3.7B.
-iPhone revenues will be down about $9B. We are expecting growth in all other categories to exceed $5B to close the gap to $3.7B. Non iPhone revenues are up 20%.
- Geographically, Greater China alone will be down over $4B and Turkey will be down $700M.
Additional color on iPhone:
We think the contributing factors to the iPhone shortfall are:
-Last year likely better than we thought at the time. Makes for a difficult comp.
-We made a fundamental error with the launch. Normal fan base focused on iPhone XS/XS Max. Momentum from event wasn’t sustained. Didn’t need to be last year but in retrospect we should have done more to keep the buzz going. Product reviews seemed to have minimal affect.
-Subsidy removal which both lowered the price and acted as a trigger to upgrade
-Price increase at the entry price point (From $649 to $699 to $749) compounded by strong USD.
-Carrier focus on other revenue streams (content, etc)
-Battery program. (Now expect 10-11M users to participate)
Trying a number of actions to increase sales (trade in, carrier, etc)
Additional color on China:
-Economy
-Competition
-Trade war, nationalism
-Tough quarter on all products in China.
No Legal requirement to pre-announce but want to do it
-likely the end of next week
-assessing best approach
-will not include Q2 guidance.
-will make a comment about buyback TBD (net cash zero)
-numbers will move around some over the next two weeks.
Some good news
-Services, Wearables, and Mac will hit all time records
-iPad will grow double digit in units and revenue
-Watch will grow over 50%
-Services will come in just shy of $11B.
-Each of the categories are above current consensus estimates.
-Installed base continued to grow.
Questions
[This document is from In re Apple Inc. Securities Litigation (2022).]
Further context: Apple Makes Rare Cut to Sales Guidance (January 2, 2019)
Further reading: Apple’s Terrible No Good Very Bad Earnings Warning
Steve Jobs emails himself
From: Steve Jobs
To: Steve Jobs
Date: Thursday, September 2, 2010 at 11:08PM
I grow little of the food I eat, and of the little I do grow I did not breed or perfect the seeds.
I do not make any of my own clothing.
I speak a language I did not invent or refine.
I did not discover the mathematics I use.
I am protected by freedoms and laws I did not conceive of or legislate, and do not enforce or adjudicate.
I am moved by music I did not create myself.
When I needed medical attention, I was helpless to help myself survive.
I did not invent the transistor, the microprocessor, object oriented programming, or most of the technology I work with.
I love and admire my species, living and dead, and am totally dependent on them for my life and well being.
Sent from my iPad
This document was released by the Steve Jobs Archive, which was just announced by Laurene Powell Jobs as "a repository of historical materials relating to Steve, some of which have never before been made public"
Further reading: the Steve Jobs Archive
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