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Apple CEO Tim Cook. Photo: Stephanie Keith/Getty Images

Apple warned Wednesday that revenue from its holiday quarter will fall short of prior estimates, a rare occurrence for the iPhone maker.

Why it matters: Apple is one of the world's biggest companies and a significant driver of the tech economy. The company said it now expects revenue of around $84 billion, down from a prior estimate of between $89 billion and $93 billion.

Shares fall: Apple's stock tumbled once after-hours trading resumed after a brief halt. Shares changed hands recently at $146.10, down $11.82 or nearly 7.5%.

In a letter to investors, CEO Tim Cook blamed slow iPhone sales in China for the shortfall.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China," Cook said. "In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad."

Cook added that the trade war between the U.S. and China exacerbated the weakening economy there, and that he hasn't seen any signs Apple has been targeted by the Chinese government.

The context: There had been hints of weak iPhone demand for weeks, with a number of reports of suppliers and contract manufacturers cutting production plans. Yet similar reports have also appeared after strong launch quarters, too.

  • Outside of the iPhone and China, Apple said its business was strong. Cook said Apple's non-iPhone businesses (aka services, Mac, iPad, wearables and accessories) up 19% year-over-year. However, the iPhone is the biggest driver of Apple's sales and profits.

Thought bubble, via tech editor Scott Rosenberg: Apple's warning, while rare and a temporary shock to its shares, is probably more alarming for the wider world, since Apple's visibility into what is actually happening in China is likely to be more reliable than more official info on the state of Chinese economy. In other words, this could be worse news for China — and the world economy — than for Apple specifically.

Go deeper

Local news moves to the inbox

Illustration: Annelise Capossela/Axios

A slew of new companies are launching platforms for local newsletters, a shift that could help finally bring the local news industry into the digital era.

Driving the news: Substack, the email publishing platform for independent journalists, on Thursday announced a new local news platform.

J&J vaccine pause hurts its reputation

Reproduced from Economist/YouGov poll; Chart: Axios Visuals

Americans' confidence in the safety of Johnson & Johnson's coronavirus vaccine took a big dip this week after the pause in its use, per new YouGov polling, even though the risk of blood clots following the shot is extremely low, if it exists at all.

Why it matters: For the majority of people, particularly high-risk Americans, getting the J&J shot is almost certainly less dangerous than remaining vulnerable to the coronavirus.

Felix Salmon, author of Capital
1 hour ago - Economy & Business

Inflation will rise. Don't panic

Illustration: Annelise Capossela/Axios

It's been 40 years since America last saw a damaging level of inflation. Yet despite that — or perhaps because of it — inflation fears are widespread, and could even become self-fulfilling.

Why it matters: The government's strategy for bringing back employment and widespread prosperity involves a necessary — yet temporary — increase in inflation. When an entire generation has never experienced such a thing, that can be disconcerting. And for the time being, Americans are not buying what the government is selling.