Shares of Apple (AAPL), the first company in the world to hit a market capitalization of 1 trillion dollars, fell in early trade on Thursday as the technology firm cut its revenue guidance for the fiscal first quarter late on Wednesday, blaming fewer iPhone upgrades than anticipated in some emerging markets.

The Cupertino, California-headquartered firm now expects sales of about $84.0 billion during the three months that ended December 30, well below the analyst consensus of $91.4 billion on Capital IQ. Most of the shortfall and more than 100% of year-over-year worldwide sales decline occurred in Greater China as the contraction in the smartphone market has been “particularly sharp,” according to a letter to investors.

First-quarter operating expenses are now forecast at $8.70 billion versus $7.64 billion a year ago.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple Chief Executive Officer Tim Cook said in the letter. “We believe the economic environment in China has been further impacted by rising trade tensions with the United States.”

Apple said lower-than-anticipated iPhone revenue accounted for “all” of its shortfall to guidance and for much more than its entire year-over-year sales decline. In fact, it pointed out that categories outside of iPhone – services, Mac, iPad, wearables/home/accessories – combined to grow almost 19% year-over-year.

Nevertheless, the company said that it was taking action to improve its results. One of the initiatives is to make it simple to trade in a phone in the firm’s stores, finance the purchase over time, and get help transferring data from the current to the new phone.

Looking ahead, Apple said that it expected to exit the quarter with about $130 billion in net cash as cash flow and profitability were strong. “As we exit a challenging quarter, we are as confident as ever in the fundamental strength of our business,” Cook said. “Most importantly, we are confident and excited about our pipeline of future products and services.”

Shares of Apple traded more than 8.5% lower in early trade on Thursday.