China Takes Wind Out Of Apple iPhone Sales

China Takes Wind Out Of Apple iPhone Sales

Apple on Wednesday took the rare step of cutting its quarterly sales forecast, with Chief Executive Tim Cook blaming slowing iPhone sales in China, whose economy has been dragged down by uncertainty around US-China trade relations.

As Apple for the longest time didn't manufacture the iPhone in India, it also couldn't reep tax benefits in India and it has been unable to open Apple stores in the country due to laws that pertain to sourcing local components.

Cook lowered the company's revenue guidance for the three months that ended December 29, to about $84 billion from as much as $93 billion.

Meng Wanzhou, who is also the daughter of the company's founder, Ren Zhengfei, was detained in Vancouver on December 1 on a United States extradition request linked to sanctions-breaking business dealings with Iran. It was the first time since June 2002 that Apple issued a reduction in its quarterly revenue forecast.

Mr Cook also acknowledged that consumers in other markets are not buying as numerous latest iPhones, released last fall, as Apple had anticipated. The company also expects a gross margin of approximately 38 per cent and other expenses to sit around $550 million approximately.

The company is expected to report results for the fiscal first quarter of 2019 after market close on January 29.

Apple ended Wednesday's session with a share price of $157.92, which was already a 30% decline from an all-time high of $227.63 on August 27.

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iPhones are some of the most compact smartphones on the market.

Mr Cook said Apple's revenue for the quarter including the crucial holiday shopping season will fall well below Apple's earlier projections and those of analysts, whose estimates sway the stock market.

"We believe the economic environment in China has been further impacted by rising trade tensions with the United States", he added.

China is not only the problem for Apple.

The tech company's troubles send a message for companies doing business in China, or suppliers with customers that do business in China, that the effects of trade tensions and a slowing economy are rippling to consumers, curbing demand and spending.

The stark acknowledgment from the premier USA tech company is sending reverberations throughout global markets and even led Citi to ask an existential question: "What if China Sales Went to Zero?" This has some investors anxious that Apple's flagship device has lost its mojo.

"We would anticipate the company increasing share buybacks on the weakness to return capital to shareholders at discount prices", said Trip Miller, managing partner at Apple shareholder Gullane Capital Partners.

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