Apple shares tumble as firm blames sales slump on China slowdown

Apple shares tumble as firm blames sales slump on China slowdown

"Our revenue for Apple's fiscal 2019 first quarter, which ended on December 29, will be lower than our original guidance for the quarter", an open letter from Apple CEO Tim Cook reads.

Apple Inc shares plunged 10 percent on Thursday after the iPhone maker blamed weak China demand for a holiday-quarter revenue shortfall, with many investors anxious the rare stumble was a harbinger for slowing global growth.

Analysts see iPhone's high price point and lack of major updates as the major reasons for the Chinese market's lukewarm reaction to its new iPhone releases.

Cook blamed the lowered forecast on several different factors, including the timing of its latest generation iPhone launches, a strong United States dollar creating foreign exchange headwinds, supply constraints, and economic weakness in some emerging markets.

Cook attributed the primary drop in revenue to challenges in emerging key markets - mainly China - and a waning in the sales of iPhones. The new iPhone XS, XS Max, and XR began shipping in Q4 2018, leading to fewer sales to be counted in the first quarter of 2019.

Explaining the causes behind the revision, Cook nearly squarely blamed the expected drop in sales on the economic slowdown in mainland China, a key emerging market for Apple's smartphones.

Timing of the iPhone launches. "We grew 16%, which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there'". 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.

The statement from one of the world's largest companies will further rattle investors already anxious about the slowing Chinese economy.

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Too many new products. FedEx Corp., Starbucks Corp., Tiffany & Co. and Daimler AG are also finding it harder to sell their wares in the world's second-largest economy.

"That is having an impact on earnings and it's not going to be just Apple", White House Chairman of the Council of Economic Advisers Kevin Hassett said in an interview with CNN.

The U.S. tech giant blamed longer upgrade cycles and headwinds in China for lower-than-expected iPhone sales.

"I think the trade war had a lot to do with this", Zino said. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week. To put it that number into perspective, Facebook is now worth $380 billion ($70 billion less than what Apple lost in the last quarter).

Buried deep in the letter is Cook's admission that some of the devoted Apple fans who used to buy new devices every year are now "taking advantage of significantly reduced pricing for iPhone battery replacements".

Apple's decision to cut its sales outlook, "isn't a huge shock at this point", said Shannon Cross of Cross Research.

Apple shares skidded 7.7 percent in after-hours trade, dragging the company's market value below $700 billion.

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