Tim Cook, Apple’s CEO in his letter to shareholders stated that Apple reduced greatly its Q1 guidance. Just earlier to the announcement, Apple stock was stalled during after-hours trading. Also, shares were down by 7% when trading recommenced 20 minutes later.

Apple lowered revenue guidance to $84 billion, down from the $89 to $93 billion it had previously projected. The company lowered gross margin to about 38 percent from between 38 percent and 38.5 percent.

Apple criticized a variety of aspects that lead to lowered guidance, which includes a weak economy in China and iPhone revenue becoming much lower than anticipated. Apple stated that the lower-than-expected revenue cropped up especially in Greater China. However, he even stated that the up gradation to new models of iPhone in other nations were not firm as they thought it would be.

Cook in his letter stated that taking a look into the results, one can see the shortfall is more than 100% from iPhone and it’s chiefly in greater China. Cook told reporters that it is apparent that China’s economy began to slow down during the second half due to the trade battle between the United States and China. Thus, puts an extra pressure on China.

Some Apple suppliers reduced their estimates during last quarter, forcing many to contemplate that consumers weren’t upgrading to the new models.

In his letter, he even stated that for Apple’s fiscal 2019 first quarter, the company is expecting:

Revenue of roughly $84 billion

Gross margin of around 38%

Operating expenses of nearly $8.7 billion

Other income/expense to be around $550 million

Tax rate of nearly 16.5% before discrete items

The company also stated that it’s also expecting the number of shares used in figuring out diluted EPS to be nearly 4.77 billion.

In order to improve the results, Apple stated that they can’t change macroeconomic situations, but they are attempting and advancing other initiatives in order to improve the results.