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

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

Troy Powers
January 4, 2019

The company said Wednesday that it expected revenue of about $84 billion in the quarter that ended Saturday, down from a previous estimate of $89 billion to $93 billion.

Apple announced a lower-than-expected guidance for the upcoming quarterly report.

When compared to the estimates provided by Apple to its investors in November, the revenue amount took a drastic nosedive, while the "other income/(expense)" category went through the roof, reaching approximately $550 million from an initial estimate of $300 million.

Shares suffered another sharp decline the day after Apple cut its revenue forecast, blaming lackluster sales in China during the holiday quarter.

The warning is similar in vibe to the concerns Apple endured more than a year ago, when it missed its fiscal fourth-quarter numbers amid an economic downturn.

Apple CEO Tim Cook wrote a letter to investors, which was issued alongside the press release, and he also spoke to CNBC Wednesday afternoon to answer questions about the quarter and revised guidance.

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Those deemed "essential" are spared but employees of the rest (around 40%) are placed on unpaid leave and told not to work. Says Mulvaney: "We moved off of the five and we hope they move up from their 1.3".

People walk past an Apple store in Beijing on Dec 11.

Apple will have to figure out ways to fearless macroeconomic woes like this, and that might mean learning to make more money from non-iPhone products in its catalog.

With more than 40 stores and hundreds of millions of iPhones sold in the country, Apple is arguably the most successful and highest-profile U.S. company in China. Hassett says that Apple and other US companies operating in China, will see their business return in the country if the USA can have a successful negotiation with China. This in turn has caused shares to drop by more than 7 percent, essentially shaving off $55 billion from Apple's overall market value. It's also harder to lock in users within the iOS system in China, where proprietary Apple services, including iMessages and iTunes, aren't as popular as in the U.S. Nevertheless, the relatively poor earnings performance has depressed Apple's share price by about 8% recently, and may have had a knock-on effect on other tech stocks.

"I don't think the strategy laid out here by Tim Cook is one that will significantly turn around the iPhone business", Zino said.

Apple was down as much as almost 10% on the news.

In a letter to investors, Mr Cook said that slower growth in China was largely responsible for the shortfall, pointing to an escalating trade war with the US. According to Cook, the shortfall is "over 100 percent from iPhone and it's primarily in greater China".