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Apple boss Tim Cook made US$136M in 2018 but faces tough year ahead amid waning iPhone sales

In response to waning iPhone sales, Apple has reportedly cut planned production for its next three models by about 10% for the next three months

Tim Cook
Tim Cook: He's in the money

Tim Cook took home US$136mln as the chief executive of Apple (NASDAQ:APPL) last year after the iPhone maker posted record earnings and became the first company to reach a market value of US$1trn.

Cook received a US$3mln salary, a US$12mln bonus and US$121mln from his 10-year stock award for the year ended September 29. He also got perks of about US$682,000.

READ: Apple shares plunge after tech giant warns 1Q revenue will be lower than expected

The bonus - his biggest ever - was linked to revenue and operating income targets, which were both 16% higher than a year ago.

But Cook may struggle to deliver the same stellar performance as he did last year.

Apple’s share price crashed last Thursday after the company cut its revenue guidance for the first time in almost two decades due to lower-than-expected iPhone sales in China and elsewhere.

The company said it expects revenue for its fiscal first quarter to be as much as US$9bn lower than previous estimates.

Thursday’s share price slump pushed Apple’s market capitalisation to US$700bn, meaning it had lost US$450bn in value since its peak of US$1.1trn last year.

READ: Amazon takes over from Microsoft as world's most valuable listed company

At the time of writing, Apple was worth US$715bn after a slight recovery in the shares.

Apple reportedly cuts iPhone production 

In response to waning iPhone sales, Apple has reportedly cut planned production for its next three models by about 10% for the next three months.

According to the Nikkei, the company has asked its suppliers to produce less of its iPhone XS, XS Max and XR models than originally planned.

It would be the second time Apple has cut iPhone in the last two months if the report is accurate.

'Mispriced' iPhone the main culprit of sluggish sales, says Wedbush

Analysts at Wedbush believe trade tensions between the US and China have not helped demand for Apple’s latest iPhone XS/XR products in the Asian nation.

But they think the primary driver of Apple’s demand doldrums come down to a “mispriced smartphone with XR as the culprit in China and elongated upgrade activity within its installed base a clear headwind”.

“As the dust has started to settle after Apple’s December earnings debacle last week, now many tech investors are attempting to model out the different scenarios for iPhone unit shipments in FY19 and FY20 to gauge the worst case, base case, and bull case scenario for the stock over the next year,” the analysts said.

Wedbush expects the shares to be “range bound” until Apple reports its final first-quarter results on January 29 after the US market closes. All eyes will be on the March guidance as the key swing factor for the shares in the near term, they said.

“We continue to believe the services business, poised to exceed US$50bn in FY20, will be the ultimate driver for the next phase of the Apple growth story set to take hold over the coming years with 190 million to 200 million iPhones shipping in both FY19 and FY20 based on our new estimates,” Wedbush said.

“In a nutshell, better execution, a more innovative product strategy, larger M&A around content/more services, and losing pricing hubris (e.g. $750 XR device) will need to take place in Cupertino with Cook’s chess moves over the coming months laying the groundwork to help get Apple out of its darkest chapter in the modern iPhone era.”

Quick facts: Apple Inc.

Price: 317.94 USD

Market: NASDAQ
Market Cap: $1.38 trillion

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