Apple shares sink as iPhone sales figures slashed

07 January, 2019, 01:11 | Author: Brooke Harris
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Trump also made it a point to say that Apple CEO Tim Cook is a "friend" of his and he wants Apple to make products in U.S. and not China which they do now.

"When asked about the tech giant's shock announcement that revenue for the holiday quarter came in lower than expected, Trump pointed to Apple's stock price increase since the 2016 election as evidence that the company is doing just fine".

In December, Bloomberg News reported the company was facing a "fire drill" to boost iPhone sales. China's economy has been pinched by the ongoing Sino-US trade war which is spilling over to other Asian economies.

Trump said Apple has gone up "hundreds of percent" since he's been president, but added that he wants the company to make its iPhone and other products in the US. Analysts polled by FactSet had expected Apple's revenue to be about 9 per cent higher - $91.3 billion.

Bhansali described the warning as a red herring because Apple should have foreseen the problems when they cut their earnings outlook in the third quarter.

Apple's shares fell by 10%, taking its value - which past year saw it become the first listed company to be worth more than $1tn - below $700bn.

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The broader S&P 500 fell 50 points, or 2 percent, to 2,460. As for supply issues, the letter claims that sales of the Apple Watch Series 4, iPad Pro, AirPods, and the MacBook Air were all constrained during "much or all" of the quarter. But he admitted that the downward revision of its sales forecast is "disappointing". "All premium Android phones will have 5G in the first half of 2019, but iPhones will likely have to wait until Q4 of 2020", he noted. But Cook specifically said he "would not put China in that category" of countries with troubled growth. Build those plants in the United States. That would lead to the total iPhone units sold to decline by 20%, or by about 62 million units, they said.

But after decades of expansion, the Chinese economy is slowing down.

"The question for investors will be the extent to which Apple's aggressive pricing has exacerbated this situation and what this means for the company's longer-term pricing power within its iPhone franchise", James Cordwell, an analyst at Atlantic Equities, told Reuters. The iPhone X, which debuted in 2017, was Apple's most expensive iPhone ever coming in at $999. iPhone prices continued to climb as the company debuted the XS and XS Max past year, with the former starting at $1,099.

"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, United States dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements".

Stocks around the world had tread water to ring in the new year while safe-haven assets including bonds, gold and the Japanese yen rallied yesterday as Chinese and European economic data bolstered concerns of a slowdown in global growth.

"Second, the strong U.S. dollar would create foreign exchange headwinds and Apple forecasted this would reduce its revenue growth by about 200 basis points as compared to the previous year". Apple's troubles may have ripple effects on other technology companies, given investors have been bailing on the industry in recent months.

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