It's all about Apple as it blames China
- Author: Eleanor Harrison Jan 04, 2019,
Jan 04, 2019, 5:18
Today we are revising our guidance for Apple's fiscal 2019 first quarter, which ended on December 29.
In a letter to investors on Wednesday, chief executive Tim Cook said the firm's sales problems were primarily in its Greater China region, which includes Hong Kong and Taiwan and accounts for nearly 20% of its revenue.
"If you look at our results, our shortfall is over 100% from iPhone, and it is primarily in greater China", Cook told CNBC. That includes an "earlier release date" for the iPhone XS and XS Max compared to the iPhone X (which could make sense, because it wasn't quite a year between the launch timing), the overall strength of the US dollar, and even due to the number of different devices that Apple launched in the fall of 2018.
Apple's poor performance was echoed by its fello Faang companies - Facebook, Apple, Amazon, Netflix and Google - which all performed poorly in 2018.
"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. In the letter, Cook says people are replacing batteries more than they are buying iPhones.
The announcement caused Apple to temporarily halt trading in its shares, and when the stock resumed trading after-hours, investors promptly dropped its price to the tune of 7.5 per cent. ®.
The price gap is one reason Huawei surpassed Apple in smartphone sales from April through September past year to seize the number two spot behind industry leader Samsung, according to the research firm International Data Corp. That would make Apple's shitty quarter the world's problem, and that's just good management. This isn't unprecedented, but it might come as a bit of a shock to those investors that've seen quarter after quarter of big iPhone sales and revenue aplenty across the board for the company.
That spells trouble for companies that rely on China's enormous market to boost their global sales.
Apple stock had already declined almost 30% since the end of October through Wednesday, as concerns had mounted about weak demand for the iPhone models released last fall, amid a number of smartphone supplier warnings.