Economy

China Takes Wind Out Of Apple iPhone Sales

China Takes Wind Out Of Apple iPhone Sales

In a letter to investors, Mr Cook said that slower growth in China was largely responsible for the shortfall, pointing to an escalating trade war with the US. Experts say many Chinese consumers are likely to reject Apple's iPhone price increases and instead buy less costly models from competitors. Some of the company's iPhones have passed the $1,000 mark while Chinese brands look to fill the mass market.

Technology stocks are leading a sharp decline in early trading on Wall Street after Apple said iPhone sales were slowing down in China.

Late a year ago, investors became anxious that the trend was about to worsen when Apple said it would stop reporting how many iPhones it had sold.

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"For a while now there's been an adage in the markets that as long as Apple was doing fine, everyone else would be OK", said Neil Wilson, chief markets analyst at Markets.com. Apple's shares were briefly suspended on Wednesday night, and in post-market trading fell by up to 8pc, wiping nearly $60bn off its value.

Cook's letter rattled investors, with analysts calling it a "bombshell".

Slumping financial markets seemed to hurt consumer confidence in China, he said, "with traffic to our retail stores and our channel partners in China declining as the quarter progressed".

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After Asian markets tumbled overnight and European exchanges stumbled, US futures were trading lower on Thursday morning, dragged down by Apple's stunning announcement Wednesday. FedEx Corp., Starbucks Corp., Tiffany & Co. and Daimler AG are also finding it harder to sell their wares in the world's second-largest economy. The tech behemoth had projected total revenue for the quarter to come in around $91 billion but now is forecasting about $84 billion.

In the letter, Cook blamed a variety of factors for the revenue shortfall, but placed a significant amount of the responsibility on the recent economic slowdown in China. Specifically, Cook said that poor iPhone sales in China was the main reason behind Apple's revised guidance. Over the years there's been a great deal of chatter around the subject of "planned obsolescence", and here we have Apple essentially confirming that this is indeed part of the business model. This comes a day after CEO Tim Cook announced a revision to Apple's revenue guidance for the last quarter of 2018. STMicroelectronics, which makes imaging sensors for the new iPhone, dropped 9.2 percent, Business Insider reported. Apple shares tumbled after Thursday's open.

However, he added that developed markets saw troubles as well, as fewer customers than expected chose to upgrade to Apple's newest phones.

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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".