Apple admits it is going to miss iPhone sales

05 January, 2019, 05:21 | Author: Dave Hampton
  • Apple CEO Tim Cook delivers the keynote address at the Apple 2012 World Wide Developers Conference at Moscone West

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. The truth remains that the iPhone has always been Apple's core business and if Apple can't sell enough of them, the whole company struggles. Apple shares are down 9.27% in midday trading on Wednesday at $143.28.

Investors also were encouraged by news that the US and China will hold trade talks in Beijing on January 7 and 8.

Peter Richardson, a research director at Hong Kong-based Counterpoint Research, said it was hard to see a catalyst that will help Apple recover lost ground in China.

"People are anxious that if a big name such as Apple has to report a decline in earnings, who else can be protected from something like that?", he said.

Indeed, Apple faces several tough Chinese competitors like Huawei and Xiaomi that are now selling cheaper smartphones that are increasingly popular in China, as research firms like IDC have previously reported.

He also cited other factors that contributed to the drop in iPhone revenues such as consumers adapting to a world with fewer carrier subsidies, price hikes resulting from a stronger US dollar, and lower price for iPhone battery replacements.

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Despite these challenges, we believe that our business in China has a bright future.

Nationalistic sentiment was likely intensified by Apple apparently ignoring a Chinese court-ordered ban on iPhone sales in a case involving U.S. chipmaker Qualcomm, according to the analyst.

Dialog Semiconductor, which makes chips, saw shares fall seven percent at the opening of Frankfurt markets, according to CNBC.

To be sure, Apple's warning would've had a much larger impact if not for the drubbing equities have taken over the last three months.

"It's two-third what's happening in China and one-third Apple's pricing", said Gene Munster, managing partner at Loup Ventures, noting the weighted average iPhone price had jumped 23% with the release of the new models.

In the letter, he admitted that fewer people were locked into the route of automatically upgrading their iPhones for whatever price Apple demanded.

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Chinese shoppers told Reuters another element had been key: the high price-tag on Apple's flagship phones.

So, not only is the overall smartphone market just not a fast-growing one, but Apple's corner of it - lucrative as it is - looks set to become a smaller portion of the overall market.

Data Sheet, Fortune's technology newsletter. Stocks went into a steep slide Thursday after Apple sent a shudder through Wall Street with word that iPhone sales in China are falling.

This represents the biggest stock market dive since 5 December when United States stocks suffered a dramatic decline; the Dow Jones fell 800 points back then due to renewed concerns over Washington's trade dispute with China and indications of a possible looming economic recession.

"We nevertheless expect the situation to stabilize in 2020 and EPS growth to resume", Ferragu said.

Stock market trying to rebound after disastrous Christmas Eve
Advancing issues outnumbered decliners by a 1.45-to-1 ratio on the NYSE and a 2.15-to-1 ratio on the Nasdaq. Hong Kong's Hang Seng advanced 0.2 percent to 25,531.63 and Seoul's Kospi added 0.6 percent to 2,040.76.

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