Apple shares plunge after blaming weak revenue on China slowdown, trade war

Marcus Newton
January 4, 2019

When compared to the estimates provided by Apple to its investors in November, the revenue amount took a drastic nosedive, while the "other income/(expense)" category went through the roof, reaching approximately $550 million from an initial estimate of $300 million.

Apple had initially projected revenue of $93 billion for the Q1 this year but they are lowering its revenue guidance by 9.7% to $84 billion.

Other factors adversely affecting Apple include a strong USA dollar and an economic slowdown in many emerging markets, Cook added. In his letter, Cook said that more than 100% of the company's worldwide revenue decline was in China for sales of iPhones, Macs and iPads.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook said in a letter to investors. 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. Sales of Apple Watch Series 4 and iPad Pro were constrained much or all of the quarter. The Apple CEO attributed the reduced demand to fewer network subsidies, the stronger US dollar, and cheap iPhone battery replacements.

Apple's poor performance was echoed by its fello Faang companies - Facebook, Apple, Amazon, Netflix and Google - which all performed poorly in 2018. Wearables grew by nearly 50 percent year-over-year, thanks to holiday sales of the Apple Watch and AirPods.

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On Wednesday, Apple said trade tensions had hurt consumer confidence.

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.

New Zealand share prices edged lower following on from another volatile session on Wall Street, which saw the Dow Jones industrial index drop by 2.8 per cent on the back of a profit warning from the United States tech giant Apple. "While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, U.S. dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements".

Apple shares have been down more than 7 percent in Thursday's premarket session, slicing 95 points off the Dow Jones Industrial Average when the markets begin trading.

The announcement comes on the heels of a recent Chines court ruling to halt the sale of some iPhones in China, after a petition from chipmaker Qualcomm accused Apple of patent violations.

Other reports by MaliBehiribAe

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