Apple is trying to steal business from China’s homegrown smartphone players

Dow suffers another drop after Apple sends shock waves with warning of weak sales

Dow suffers another drop after Apple sends shock waves with warning of weak sales

In a letter to investors Wednesday, Apple CEO Tim Cook said the company's fiscal Q1 2019 revenue would be lower than expected, a rare occurrence from one of the most valuable and profitable companies in the world.

Apple blamed bad sales numbers in China as a big reason why it had to revise its forecast.

Prices for the iPhone have risen significantly in recent years, and particularly so in the fall 2018 iPhone lineup. Cook's update on Wednesday revealed that guidance has now plummeted to $84 billion in revenue for the quarter.

Apple briefly became the world's first trillion-dollar public company in 2018, before a disappointing set of results in its fourth quarter caused its share price to begin a steady decline.

Apple's top-of-the-line iPhones have a starting price of $1,000 (£800).

Dan Ives of Wedbush said in an analyst note that Apple's news of its revised guidance on slowing iPhone sales "was clearly Apple's darkest day in our opinion and represents a challenging growth period ahead for the company (and its investors)".

Apple's first instance of revised earnings guidance since 2002 has the potential to rattle the financial markets as it puts the spotlight on China's woes and the dependence of the largest US companies on strong growth in the world's second-largest economy. The deal required customers to trade in an iPhone 7 Plus, a high-end handset from two years earlier.

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.

"I think there are a heck of a lot of United States companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year until we get a deal with China". "Until it changes this pricing strategy, it is unlikely to see market share growth and will most likely see a gradual contraction as iPhone users upgrade at slower rates", said Richardson.

Shares of US -based Apple suppliers and chipmakers including Cirrus Logic Inc CRUS.O , Skyworks Solutions Inc SWKS.O , Analog Devices ADI.O , Broadcom Inc AVGO.O , NXP Semiconductors NV NXPI.O and Micron Technology Inc MU.O all tumbled.

"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 said. There are likely many others, too, that will be forced to announce lower-than-expected earnings, according to the chairman of the White House Council of Economic Advisers.

Market analysts believed that Apple's products like iPhones in China are facing strong competition from many Chinese home-grown smartphone rivals including Huawei and Xiaomi, whose smartphones are much cheaper than iPhones.

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