Apple to Miss Sales Expectations, Dow takes a Hit

Posted January 05, 2019

The announcement, made in a letter from Cook to investors, comes after weeks of signals from inside Apple and its supply chain indicating the Cupertino, California-based company is struggling to sell the latest iPhones released in September.

Indeed, to illustrate that risk playing out, Apple announced on January 2 that it wouldn't be meeting its original financial guidance for the first quarter of fiscal 2019, reducing its revenue guidance to $84 billion from a prior projection of between $89 billion and $93 billion.

It's the first time since 2002 that Apple issued a reduction in its quarterly revenue forecast.

The company said it now sees fiscal first-quarter revenue of $84 billion, below the $89 billion to $93 billion that it had previously expected.

Apple's shares ended down almost 10 percent on Thursday after chief executive Tim Cook blamed a slowdown in China sales for falling revenues.

Shares of Apple Inc.

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Technology companies in particular, which rely heavily on sales to China, have been slumping in recent months out of fears of a slowdown there. He added that overall, "consumption growth" is slowing down across China.

He said that even in some markets, upgrades to new iPhone models were "not as strong as we thought they would be".

Apple has shaken the business world by lowering its sales and revenue forecast for the next quarter.

"We believe the economic environment in China has been further impacted by rising trade tensions with the USA".

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".

United States government bond prices surged, sending yields to their lowest level in nearly a year, and gold and high-dividend stocks like utilities also rose as investors looked for safer places to put their money.

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"Apple stock is now at a crossroads", said a research note Thursday from Gene Munster and Will Thompson of the investment firm Loup Ventures.

Economic experts have blamed Chinese consumer concerns on the country's tariff dispute with the United States as well as an increase in news about falling automobile and real estate sales in China.

Japanese markets have tumbled as they reopened after the New Year holidays, while other Asian indexes are mixed after a technology-led sell-off on Wall Street.

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.

"That is having an impact on earnings and it's not going to be just Apple", he said. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week.

Apple, which was until recently the largest publically trade company in the USA, is now worth less than Microsoft, Amazon and Google's parent company, Alphabet. And revenue from consumption tax was down 72 percent in November from a year ago, Balding said.

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