Apple shares drop after news of waning iPhone sales

Apple shares drop after news of waning iPhone sales

Troy Powers
January 5, 2019

It is rare to hear that iPhone buyers prefer to replace their battery rather than upgrade to a new iPhone, which of course also suggests the converse - that Apple has been benefitting from the throttling of older iPhones and the high cost of replacing their batteries to drive sales.

In a note to investors, Apple CEO, Tim Cook, revealed that the company was revising its estimates for end-of-year income.

As per those reports, Apple's stock (NASDAQ: AAPL) has [and continues to] be battered by a barrage of negative news citing slashed iPhone sales, production and overall outlook, which as of Thursday morning have collectively knocked 39 percent off AAPL's value. The revenue revision, which came late Wednesday, led markets lower around the world and also triggered a slump for Asian suppliers and a wave of lower price targets from Wall Street. Cook states that the "magnitude of the economic deceleration" in Greater China took Apple by surprise, resulting in much of its revenue decline. The second largest economy is slowing, and could be a convenient excuse for companies missing forecasts, but two veteran global investors say Apple's problems are largely self-inflicted, not a harbinger of a looming catastrophe in emerging markets.

In December, Bloomberg News reported the company was facing a "fire drill" to boost iPhone sales. USA stocks have tumbled over the last three months as investors anxious that the economy might slow down dramatically because of a variety of challenges including the trade dispute and rising interest rates.

Apple Inc.'s falloff in demand for iPhones in China shows the company's flagship product is hurt by its high price and the rise of cheaper, more comparable rival devices in the world's biggest market. "The iPhone is something that everyone knows and buys, and if people aren't buying it, then it's a pretty good sign they're having a hard time". "We grew 16%, which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there'".

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The statement from one of the world's largest companies will further rattle investors already anxious about the slowing Chinese economy. China's economy has been pinched by the ongoing Sino-US trade war which is spilling over to other Asian economies.

"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.

Too many new products.

"That is having an impact on earnings and it's not going to be just Apple", White House Chairman of the Council of Economic Advisers Kevin Hassett said in an interview with CNN. The news comes as USA earnings season looms around the corner. Plus, he doesn't think the Apple decline is a push back to trade tensions. On its website in China, Apple now advertises the iPhone XR for 4,399 yuan with the trade-in of an iPhone 7 Plus.