Apple plunges most in nearly six years on IPhone slump

05 January, 2019, 00:15 | Author: Brooke Harris
  • Nobody in China wants Apple's eye-wateringly priced iPhones, sighs CEO Tim Cook

In a letter to investors on Wednesday, chief executive Tim Cook said the firm's sales problems were primarily in its Greater China region, which includes Hong Kong and Taiwan and accounts for nearly 20 percent of its revenue.

A key White House adviser said in response that the ongoing tensions were going to mean that a "heck of a lot" of U.S. 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.

Prices for the iPhone have risen significantly in recent years, and particularly so in the fall 2018 iPhone lineup.

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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.

The precipitous decline in Apple shares was accompanied by plunges for companies that produce parts for Apple devices. It's also harder to lock in users within the iOS system in China, where proprietary Apple services, including iMessages and iTunes, aren't as popular as in the U.S. The deal required customers to trade in an iPhone 7 Plus, a high-end handset from two years earlier.

Shares of USA -based Apple suppliers and chipmakers including Cirrus Logic Inc CRUS.O , Skyworks Solutions Inc SWKS.O , Analog Devices ADI.O , Broadcom Inc AVGO.O , NXP Semiconductors NV NXPI.O and Micron Technology Inc MU.O all tumbled.

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The promotion in China is available until January 31, around the same time the iPhone maker is expected to release its fiscal first-quarter earnings.

Apple said Wednesday that demand for iPhones on the market is declining and its revenue guidance for its fiscal 2019 first quarter, which ended on December 29, 2018, was revised downward. In pre-market trading, shares were also down about 9%.

In late December, the promotional program for the new models went live in China, adding one major perk: users in China cannot only trade in their old iPhones, but also Android phones made by Apple's major competitors in China, including Huawei, OPPO and Xiaomi.

"There are a heck of a lot of USA companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China".

Both Apple and Bernstein Liebhard have been contacted for comment.

Market analysts believed that Apple's products like iPhones in China are facing strong competition from many Chinese home-grown smartphone rivals including Huawei and Xiaomi, whose smartphones are much cheaper than iPhones.



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