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Apple shares plunge almost 10% behind revenue warning

05 January, 2019, 05:21 | Author: Shawna Walton
  • Person holding an Apple iPhone

The move confirmed investors' biggest fear - a slowing global economy further hindered by the U.S.

While disclosing a plunge in demand for the iPhone during Apple's recently completed quarter, CEO Tim Cook avoided any mention of whether increased iPhone prices might have played a role. But the news has also had a dramatic impact on the value of companies around the world who supply to Apple - and they are not necessarily in as strong a position to shoulder the drop.

"China's economy is definitely slowing quite a bit across a bunch of sectors, and this slowing momentum is likely to continue for another couple of months at least", said Arthur Kroeber, the founder of Gavekal Dragonomics, a research firm in Beijing.

Lately, Apple has been offering a trade-in deal for the $749 iPhone XR that will cut the price as low as $449. Major U.S. markets opened 1% lower, with the Dow falling more than 300, then over 600 points in morning trading.

Shares in the California-based tech giant fell 8% in after-hours trading after Mr Cook said it now expected revenues of around $84bn (£67bn) in the three months to 29 December, down from previous guidance of $89bn-$93bn.

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In recent weeks, Chinese media have reported stories of companies awarding stipends to employees who ditch their iPhones to buy Huawei, said Shen Dingli, a well-known global relations commentator in Shanghai.

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 USA dollar, and lower price for iPhone battery replacements. Apple has been steadily raising the price of its newest and most powerful iPhones each year, with some models now topping $1,000.

Of course, it is nothing to do with Apple or the fact people don't seem to feel the need to pay over the odds for technology they can buy for less when last year's phone worked fine.

Both Apple and Bernstein Liebhard have been contacted for comment.

Apple's market share in the third-quarter of 2018 was around 9 percent, and has dipped from above 14 percent in 2015, overtaken by local rivals like Huawei, Oppo and Vivo.

'Typically my needs for my phone are high speeds for downloading videos or transferring files from chat apps.

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.

In a letter to shareholders, CEO Tim Cook noted iPhone weakness that primarily came from greater China.

The weakening will also likely slow the Federal Reserve's interest rate hikes, which will weaken the USA dollar.

"I think 10,000 yuan ($1,400) for an iPhone is too much", said Vivian Yang, a manager at a Beijing technology company.

The company's China problems have been magnified by an ongoing trade war with the United States.

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