Here's What Analysts Are Saying About Apple's Slowing iPhone Sales
05 January, 2019, 00:19 | Author: Darnell Patrick
A key White House adviser said in response that the ongoing tensions were going to mean that a "heck of a lot" of USA firms with sales in China - not just Apple (Swiss: AAPL-EUR.SW - news) - would see their earnings downgraded until the two countries reach a deal.
Apple shares were down 9.8 percent at $142.40.
Wall Street did not take kindly to the news with Apple's shares tumbling 8% in after-hours trading to $145.15 a share after a momentary halt. Apple posted sales of $88.3 billion in the fiscal first quarter a year earlier, so the new forecast would mean Apple is reporting a holiday quarter slowdown for the first time since Cook became CEO in 2011.
On Wednesday, Apple lowered its revenue forecast to $84 billion for its first quarter ended December 29, below analysts' estimate of $88.05 billion.
Apple CEOTim Cook said in a letter to shareholders released after markets closed on Wednesday attributed that most of the revenue drop will stem from lower iPhone sales, China's slowing economy and trade tensions between China and the U.S.
"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook wrote in his letter. The company reports its fiscal Q1 2019 results on January 29.
That spells trouble for companies that rely on China's enormous market to boost their global sales.
Apple stock plummeted 10% erasing more than 74 billion dollars in market value
Although many analysts were anxious over Apple's iPhone issues, one remains unconcerned and upgraded Apple shares to "neutral" instead of "sell." as CNBC noted. Apple originally forecast revenue of between $89 billion and $93 billion. The flagship of the 2018 lineup, the iPhone XS Max, starts at $1,099-compared to the $769 starting price of the 2016 flagship, the iPhone 7 Plus.
The stock has fallen about 30 per cent since Cook first said in a November earnings call that the company might experience lower sales over the Christmas period.
"As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed", Cook said. -China trade tensions, but said the company won't "sit around waiting for the macro to change" in an interview with CNBC.
Growth in China past year is set to be the weakest since 1990.
Apple's latest comments fuelled worries that its relatively high-priced devices may be falling out of favour in China, where rivals such as Huawei Technologies Co Ltd [HWT.UL] offer cheaper options.
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