Apple to Miss Sales Expectations, Dow takes a Hit

05 January, 2019, 00:20 | Author: Darnell Patrick
  • Apple CEO Tim Cook leaves the stage after speaking at a high school

"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".

The revenue drop for the just-ended quarter underscores how an economic slowdown in China has been sharper than many expected, catching companies and leaders in Beijing off balance and forcing some to readjust their plans in the market.

Business Insider reports that the NY law firm Bernstein Liebhard has begun to attempt to gather support from Apple investors for a class-action lawsuit against the tech giant over their failure to warn investors about the lack of iPhone demand.

This is why analyst Rod Hall says Apple looks a lot like the old Nokia, which also struggled to remain relevant in the mobile market once its own business reached saturation and customers delayed upgrades to new-generation models.

Cook blamed the lowered forecast on several different factors, including the timing of its latest generation iPhone launches, a strong U.S. dollar creating foreign exchange headwinds, supply constraints, and economic weakness in some emerging markets. Analysts had been expecting revenues of around $91bn, according to market analyst FactSet. In announcing the new forecast, Cook said the Chinese smartphone market is contracting and noted that foot traffic to Apple retail stores has been down in recent months. Nowadays though, the iPhone is more expensive than ever and less people seem interested in upgrading, leading to Apple issuing its first "profit warning" since 2002.

Beyond pricing, some consumers in China have fled to competitors like Huawei's phones for their combination of unique back covers and camera systems, and upstarts like OnePlus because of its speed.

Ever since the launch of the original iPhone, Apple has been on a meteoric rise in profit, to the point where Apple hit a $1 trillion market cap a year ago.

Cook in November had cited slowing growth in emerging markets such as Brazil, India and Russian Federation when Apple gave first-quarter sales estimates that were lower than expected.

Apple shares skidded 7.7 percent in after-hours trade, dragging the company's market value below $700 billion.

Apple's move was not entirely a surprise. But he said then that he "would not put China in that category" of countries with troubled growth.

However, the company's woes in China have been exacerbated by a court decision that could potentially ban iPhone sales in the country.

Cook also spoke of "rising trade tensions with the United States" which has seen Apple become the target of a boycott campaign by prominent Chinese companies, something which has escalated more when Huawei's CFO was arrested in Canada.

Analysts are adding Apple's predictions and their effects to fears of an economic slowdown.

Huawei recently announced that it shipped more than 200 million units previous year.

Others advised Cook to stop pointing the finger at China, and instead fix the flaws in Apple services and work on new products.


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