Apple sales slow due to economic challenges in China

Adjust Comment Print

In an open letter to investors published last night, Apple cut its revenue forecast for the busy Christmas quarter by 7.8 percent.

Cook lowered the company's revenue guidance for the three months that ended December 29 to about $84 billion from as much as $93 billion. The company posted revenue of $88.3 billion for the 2017 holiday quarter. "First, the different timing of its iPhone launches, which would affect its on-year compares".

Apple's first instance of revised earnings guidance since 2002 has the potential to rattle the financial markets as it puts the spotlight on China's woes and the dependence of the largest USA companies on strong growth in the world's second-largest economy. "Apple is an enormous revenue and profit generator, and will remain so for years to come". In an interview with CNBC, he also blamed lack of subsidies for telecoms and lower battery replacement price disincentivizing upgrades.

While revenues overall will be down year-over-year, the company expects to set revenue records in several developed countries, including the United States, Canada, Germany, Italy, Spain, the Netherlands and Korea, as well as in some emerging markets. It is also due to the fact that customers are no longer willing to pay more when they can buy a comparable product from Huawei. AirPods and MacBook Air were also constrained. These included the strength of the USA dollar, in addition to "challenges" in emerging markets such as those in Asia. He further stated that "China is the biggest beneficiary of Apple, more than us".

The company is expected to report results for the fiscal first quarter of 2019 after market close on January 29.

In explaining the change, Cook said Apple "did not foresee the magnitude of the economic deterioration" in markets including greater China.

Browns pick coordinator Kitchens as next coach
He finished the year in that role after replacing the fired John DeFilippo for the final three games of the regular season. ESPN's Chris Mortensen says the Browns are hiring offensive coordinator Freddie Kitchens as their next head coach .

Most of Apple's revenue guidance shortfall - and over 100 percent of its year-over-year worldwide revenue decline - occurred in Greater China across iPhone, Mac and iPad.

Apple isn't the only company that could be hurt by China's slowing economy.

"Although the company had some quarters over the past 20 years that missed Street expectations, in the modern iPhone era last night was clearly Apple's darkest day", he wrote in a note Thursday.

In the USA, the benchmark S&P 500 stock index dropped as much as 1pc after data showed Chinese factory activity contracting for the first time in more than two years, though the index clawed back the losses later in the session. He pointed in part to "rising trade tensions" with the United States. Revenues for all of its other categories - Services, Mac, iPad and Wearables/Home/Accessories - collectively grew nearly 19 percent year-over-year.

In his letter, Cook lays much of the blame for Apple's troubles at China's door.

Cook also said in the letter that fewer carrier subsidies, price increases based on the strength of the US dollar and cheaper battery replacements caused the weak iPhone upgrades for the quarter.