Published: Sat, January 05, 2019
Markets | By Erika Turner

Apple shares plunge almost 10% behind revenue warning

Apple shares plunge almost 10% behind revenue warning

In late December, the promotional program for the new models went live in China, adding one major perk: users in China cannot only trade in their old iPhones, but also Android phones made by Apple's major competitors in China, including Huawei, OPPO and Xiaomi.

The underwhelming demand primarily came from China, Cook states, although the same can be said of iPhone sales "in some developed markets" as well.

He is calling for them to move manufacturing to the USA, however.

Shares of US-based suppliers and chipmakers including Cirrus Logic Inc, Skyworks Solutions Inc, Analog Devices, Broadcom Inc, NXP Semiconductors NV and Micron Technology Inc were all down in morning trading.

"The much larger issue is the slowing of the (Chinese) economy, and then the trade tension that has further pressured it", Cook said.

A trader works in a booth on the floor of the New York Stock Exchange, December 27, 2018. Ten of 11 primary sectors were trading lower, led by a 4% drop in information technology.

The complex outlook raises a challenge for Apple as it looks to revive its China fortunes after weakness there sparked a rare drop in its global sales forecast, knocked $75 billion from its market valuation and roiled global markets.

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"While it is true that no other single product has done for Apple as much as the iPhone, the product offering as an aggregate still puts Apple ahead of all other vendors who might be selling higher volumes but have no direct way to monetize from their users once the sale has occurred", Milanesi said in a blog. "China's economy began to slow in the second half of 2018". Japanese markets have tumbled as they reopened after the New Year holidays, while other Asian indexes are mixed after...

Companies that make heavy machinery such as construction equipment are facing less demand as China's economy, the largest in the world after the US, loses strength. But the fact remains that the iPhone is Apple's number 1 cash cow, and if people don't buy as many units as Apple anticipates, the entire company is affected.

Later in the missive, however, Steve Jobs former right-hand man would admit that the iPhone has also fallen short of expectations, both in its emerging and established markets around the world.

Plunging tech shares weighed heavily on the Nasdaq Composite Index, which is now down 2% at 6,534.19.

The reaction was less stark in other markets, with the FTSE 100 down by about 0.6% at the close though Germany's Dax and France's Cac 40 were more than 1% lower. Stocks in Asia closed with small losses. The Nasdaq, which has a high concentration of tech stocks, retreated 202.43 points, or 3 per cent, to 6,463.50. USA crude rose 1.2 percent to $47.09 a barrel in NY and Brent crude rose 1.9 percent to $55.95 a barrel in London.

The broader S&P 500 fell 24 points, or 1 percent, to 2,485. Copper, which is used in construction and wiring, fell 2.1 percent to $2.57 a pound.

The yield on the 2-year Treasury note slid to 2.39 percent from 2.50 percent, and the yield on the 10-year note sank to 2.56 percent from 2.66 percent.

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