Apple cuts sales forecast as US-China trade war bites

Apple cuts sales forecast as US-China trade war bites

"Our revenue for Apple's fiscal 2019 first quarter, which ended on December 29, will be lower than our original guidance for the quarter", an open letter from Apple CEO Tim Cook reads.

Cook also acknowledged that consumers in other markets aren't buying as numerous latest iPhones, released last fall, as Apple had anticipated. Even though Apples iPhone sales arent doing as well as previous years, it still shows promise in its ever-increasing revenue sources outside of the iPhone.

"While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, United States dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements", Cook conceded.

Mr Cook said Apple "did not foresee the magnitude of the economic deceleration" in Greater China, adding that US-China trade tensions had hurt consumer confidence.

While iPhone revenue accounted for the forecast cut, Apple's other product categories, including the iPad and services, grew a combined 19 percent year-over-year, he said.

The news sent Apple shares tumbling in after-hours trade and triggered a broader selloff in the stock market. On Wednesday, China's central bank magazine said the country's economic growth could fall below 6.5 percent in the fourth quarter as companies face increased difficulties there.

"It's been a flawless storm of negativity for Apple", Wedbush analysts wrote in a recent report. It now expects revenue of $84 billion, well below the prior range of $89 billion to $94 billion that it projected in November.

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In an uncharacteristic move, Apple has issued revised investor earnings guidance as a result of fewer iPhone upgrades and weak sales in the Chinese market, according to a press release from the tech giant. "The government-reported GDP growth during the September quarter was the second lowest in the last 25 years", wrote Cook.

Slowing sales in China isn't Apple's only problem - results have been less than stellar in other markets as well.

Analysts have questioned whether consumers are reaching their limit in upgrading to the latest iPhones, noting that the device's price tags have continued to rise.

Cook also spoke of "rising trade tensions with the United States" which has seen Apple become the target of a boycott campaign by prominent Chinese companies, something which has escalated more when Huawei's CFO was arrested in Canada.

"Revenue outside of our iPhone business grew by nearly 19 percent year-over-year, including all-time record revenue from Services, Wearables and Mac", he wrote.

The fact that Apple took the dramatic step of halting trading is an indication that the company was taken by surprise by the iPhone sales shortfall.

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