Apple Shares Tumble After CEO Tim Cook Issues Revenue Downgrade

Apple Shares Tumble After CEO Tim Cook Issues Revenue Downgrade

Apple Shares Tumble After CEO Tim Cook Issues Revenue Downgrade

Stocks tumbled today on Wall Street, with technology companies suffering their worst loss in seven years, after Apple reported that iPhone sales are slipping in China.

In a letter to investors, Apple CEO Tim Cook pointed to a slowing economy, particularly in China.

Greater China, a region that includes the mainland, Hong Kong and Taiwan, accounted for most of the revenue shortfall, but iPhone upgrades also weren't as strong as the company anticipated in some developed markets, Cook said.

Apple on Wednesday evening cut its revenue guidance for its crucial holiday quarter.

Apple had previously estimated it would earn revenues of $89 to $93 billion in the most recent quarter. Some analysts think iPhone demand has slowed, especially for the iPhone XR and iPhone XS.

Apple said China sales came in lower than expected in the quarter ending December 29 when it revised its revenue estimate downward. Apple shares are down 9.27% in midday trading on Wednesday at $143.28.

Now the ongoing trade war between the US and China may be having even more of an impact. China is also one of Apple's most important markets, once referred to as a "hypermarket" by Cook. That sparked concern Apple wanted to avoid disclosing weak growth numbers.

Kay said the trillion-dollar valuation was "irrational" and based on growth projections Apple is unlikely to achieve without a new catalyst.

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Wedbush Securities analyst Daniel Ives described it as "Apple's darkest day during the Cook era", saying: "No one expected China to just fall off a cliff like this". "We believe the economic environment in China has been further impacted by rising trade tensions with the United States", he wrote. Following this news, Apple stock dropped $11.97 per share, or roughly 7.5%, during aftermarket trading hours on January 2, 2019.

"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", Cook conceded.

"Apple is a great company", Trump said during his news conference.

The rare warning of disappointing results from Apple sent a shudder through markets Thursday and reinforced fears that the world's second-largest economy is weakening.

Both Apple and Bernstein Liebhard have been contacted for comment.

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.

He added that Apple was taking steps to make it easier for customers to trade in their phones and said other parts of the firm's business, including services, remained strong. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week.

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