Apple Drops iPhone Bombshell on Already Reeling Stock Market

Kenny Grant
January 12, 2019

Then CEO Tim Cook posted a letter on Apple's web site saying that revenue in the last quarter of 2018 would be $84 billion.

China's "economy began to slow there for the second half", Cook said during an interview with CNBC on Wednesday afternoon.

People walk past an Apple store in Beijing on Dec 11. The company even allowed iPhone users to turn the throttling off if they so desired.

The company forecast $84 billion in revenue for its fiscal first quarter ended December 29, which is below analysts' estimate of $91.5 billion, according to IBES data from Refinitiv.

Wednesday's sales forecast was the first time that Apple had revised its guidance to investors for more than 15 years.

Cook largely blamed macroeconomic factors for the company's woes but Apple may have also hit a price wall with its consumers, at least when it comes to phones. Apple's troubles may have ripple effects on other technology companies, given investors have been bailing on the industry in recent months.

Apple is cutting billions from its revenue estimates for the just-ended holiday season, citing sharply slower iPhone sales in China.

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

News of Apple's concerns saw shares slide about 7.6% in after-hours trading.

Apple is now the highest-profile multinational corporation to warn that the economic slowdown in China could hurt its business.

SAN FRANCISCO-Apple acknowledged that demand for iPhones is waning, confirming investor fears that the company's most profitable product has lost some of its luster.

The warning, which came after trading in NY closed on Wednesday, looked likely to rattle already-volatile stock markets when they reopen on Thursday - with stock index futures pointing to Wall Street falls.

While President Donald Trump's trade war with China isn't helping Apple and other USA technology companies, Ives believes Apple miscalculated by continuing to roll out high-priced phones in China, creating an opening for rivals with less costly alternatives that still worked well.

In his letter, Cook said Apple has $130 billion in net cash and that it intends to continue its efforts to reduce that cash balance to net zero, which the company has so far accomplished through dividend increases and share buybacks. He said, "While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be".

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