Apple ($AAPL) Warns of Global Slowdown, Markets Plunge

1898
china
Hong Kong, China - December 4, 2016: two red Apple signboard in IFC Mall store, full of customers looking the new technological products

Apple Inc. (NASDAQ: AAPL)

U.S. stocks are set to open lower on Thursday after shares of Apple Inc. plunged in after-hours trading on Wednesday. Apple stock, which ended 2018 down 6.8%, lost 7.5% in late trade after the company slashed its revenue guidance for its fiscal 2019 first quarter that came to a close on December 29.

Apple sent out a letter to its investors warning that it expects revenue to decline to approximately $84 billion from its previous estimate of between $89 billion to $93 billion. The company also anticipates gross margin of approximately 38% compared with its previous projection of 38% and 38.5%.



This is the first time that the iPhone-maker has lowered its quarterly revenue outlook in more than 15 years. The company put the blame on a sluggish Chinese economy and lower than expected iPhone sales “primarily in Greater China.” Chief Executive Tim Cook’ letter to Apple shareholders also included a statement saying that upgrades to new iPhone models in some developed markets were “not as strong as we thought they would be.”

Shares of Apple were down $13.92, or 8.81% to 144.00 at 07:03 a.m. on Thursday. Nasdaq-100 futures were off 2.7%, or 171.50 at 6,198, those of the DJIA were down 1.6%, or 370 points at 22,955, while S&P 500 index futures were down 1.7%, or 41.25 points at 2,469.75.

Some analysts were not expecting Apple’s business in China to be affected by the prolonged trade war between Washington and Beijing, which was initiated by President Donald Trump. Apple assembles its iPhones in China, but Trump spared the company from the 10% tariffs that he imposed on products coming into the U.S. from China.

The tariffs now appear to be taking a toll on China’s economy, a move that is also affecting the spending habits of its citizens. Signs of declining demand for Apple smartphones started to show up last year, when the tech giant said it will no longer reveal iPhone sales unit numbers on future earnings calls.

Tom Forte, an analyst with D.A. Davidson says “A weaker Chinese economy is resulting in softer demand for iPhones.” The analyst adds that Apple’s decision to lower its Q1 revenue forecast “didn’t come out of the blue.”

Apple, Inc. Profile

Apple, Inc. engages in the design, manufacture, and marketing of mobile communication, media devices, personal computers, and portable digital music players. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas segment includes North and South America.



The Europe segment consists of European countries, as well as India, the Middle East, and Africa. The Greater China segment comprises of China, Hong Kong, and Taiwan. The Rest of Asia Pacific segment includes Australia and Asian countries. The company was founded by Steven Paul Jobs, Ronald Gerald Wayne, and Stephen G. Wozniak on April 1, 1976 and is headquartered in Cupertino, CA. – CNN Money

NO COMMENTS

LEAVE A REPLY