Apple Cuts Revenue Forecast on Weak China Sales

Lloyd Doyle
January 12, 2019

Suppliers for Apple took a stock market hit after the tech company warned investors it was lowering its first quarter revenue forecast, Financial Times reported.

"The much larger issue is the slowing of the (Chinese) economy, and then the trade tension that has further pressured it", Cook said.

Apple has been an absolute juggernaut in terms of sales, growth, revenue, and profit for shareholders.

In his letter to investors, Cook touted continued traction in Apple's "non-iPhone businesses", including wearable devices and supplementary services, like iCloud, Apple Pay and the App Store. President Donald Trump has also raised new tensions between the US and China by imposing tariffs on more than $200 billion in goods, although so far the iPhone hasn't been affected directly.

Apple now expects revenue for the three months ending in December to be about $84 billion, down from an earlier estimated range of between $89 billion and $93 billion.

".in some developed markets, iPhone upgrades also were not as strong as we thought they would be". Apple's troubles may have ripple effects on other technology companies, given investors have been bailing on the industry in recent months.

China is a huge market for Apple, making up about 15% of its revenues globally.

Apple's stock plunged 7 percent to $146.40 in Wednesday's extended trading.

A slew of brokerages reduced their first-quarter production estimates for iPhones after several component makers in November forecast weaker-than-expected sales, leading some market watchers to call the peak for iPhones in several key markets.

Apple's revised first-quarter guidance has reduced the revenue by up to $9 billion and since Cook's letter revealing this, the company's stock dropped by almost 10 percent. But Cook specifically said he "would not put China in that category" of countries with troubled growth.

He added: "We believe the economic environment in China has been further impacted by rising trade tensions with the United States".

Tim Cook also blamed the ongoing trade war between the USA and China for the slowdown. This has some investors anxious that Apple's flagship device has lost its mojo.

The stark acknowledgment from the premier USA tech company is sending reverberations throughout global markets and even led Citi to ask an existential question: "What if China Sales Went to Zero?"

"We would anticipate the company increasing share buybacks on the weakness to return capital to shareholders at discount prices", said Trip Miller, managing partner at Apple shareholder Gullane Capital Partners.

Other reports by Iphone Fresh

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