Published: Fri, January 04, 2019
Money | By Ralph Mccoy

Apple shares tumble as firm blames sales slump on China slowdown

Apple shares tumble as firm blames sales slump on China slowdown

Apple on Wednesday lowered its forecast to $84 billion in revenue for its fiscal first quarter ended December 29, below analysts' estimate of $91.5 billion, according to IBES data from Refinitiv. The tech giant says slowing sales in China are to blame, the news nearly immediately affected the markets in Europe and Asia.

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"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook expressed in a written statement.

The Dow, S&P 500, and Nasdaq all plunged at the opening of trading today and continued to fall after Apple CEO Tim Cook suddenly revised Apple's first-quarter revenue predictions.

Cook claimed that the weakened demand came from China, but he noted that in "in some developed markets, iPhone upgrades also were not as strong as we thought they would be". In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad. In November the California-based company said it would quit disclosing unit sales data for iPhones and other hardware items, leading many analysts to worry that a drop in iPhone sales was coming. When the suspension on selling was lifted, Apple shares fell 7.45%.

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The company primarily blamed China's economy and trade tensions for the guidance.

"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", Cook added in his letter. Apple said the smartphone market in China has been contracting, and that's true.

The price gap is one reason Huawei surpassed Apple in smartphone sales from April through September previous year to seize the No. 2 spot behind industry leader Samsung, according to the research firm International Data Corp.

Apple, which was until recently the largest publically trade company in the United States, is now worth less than Microsoft, Amazon and Google's parent company, Alphabet. Analysts had been expecting revenues of around $91bn, according to market analyst FactSet.

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