Apple plunges most in nearly six years on IPhone slump

Fredrick Soto
January 5, 2019

USA stocks fell sharply on Thursday after yesterday's surprise revenue forecast downgrade from Apple CEO Tim Cook.

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

The U.S. tech giant Apple saw its stock price plunging more than 9 percent in early trading on Thursday after the company issued lower guidance for fiscal 2019 first quarter.

Chief Executive Officer Tim Cook said sales will be about $84 billion in the quarter ended December 29, down from earlier estimates of $89 billion to $93 billion.

Apple's top-of-the-line iPhones like iPhone XS Max, which were released in fall 2018, sold for more than 1,000 dollars, far more expensive than most China-made mobile phones on the Chinese market.

Cook said that lower than anticipated iPhone sales, primarily in Greater China, accounted for all of the company's revenue shortfall compared to previous guidance. The stock market opened the following day with Apple down $57 billion in market value.

Another question mark for Apple is its 5G strategy in China, where the USA firm is not expected to have a 5G-enabled phone until 2020, behind rivals like Huawei, Xiaomi Corp and Samsung Electronics.

Among big industrial companies that could suffer from a drop in demand from China, Caterpillar declined 3.9 per cent, Deere 2.7 per cent and Boeing 4 per cent. That sparked concern Apple wanted to avoid disclosing weak growth numbers.

"No, I'm not", Trump said after he was asked at a White House news conference about Apple's revenue warning this week.

Cook said the company expects revenue of $84 billion in the last quarter of 2018, $7 billion less than analysts had forecast.

Apple's stock price dropped nearly 10 percent Thursday, closing the day at $142.19, the company's biggest single-day loss in six years.

Robert Pavlik, chief investment strategist at SlateStone Wealth in NY said Apple's update "reiterates worries that China and trade issues have not been resolved". While this achievement was widely celebrated, it wasn't long before the bad news started piling in, leading to a substantial decline in Apple stock.

"Don't forget this: Apple makes their product in China", Trump said.

"When the United States went after the Huawei founder's daughter, the Chinese government made Apple the target of the day, so sales should be way off", independent technology analyst Rob Enderle said. Experts say many Chinese consumers are likely to reject Apple's iPhone price increases and instead buy less costly models from competitors.

President Trump's latest interchange with reporters included new stock commentary, on news dominating the tech sector this week: He's not anxious about a drop in Apple's (AAPL +3.7%) stock price. "Apple was at a number that was incredible, and they're going to be fine". (AAPL) are down more than 9% in NY trading after the company announced it will miss its revenue forecast for the critical holiday quarter.

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

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