"...most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline occurred in Greater China across iPhone, Mac and iPad", Cook said. In an interview with CNBC, he also blamed lack of subsidies for telecoms and lower battery replacement price disincentivizing upgrades. The reason? "China's economy began to slow in the second half of 2018." Wow.
Within just two months, China, the world's largest smartphone market, has turned from a growth driver to a weak spot for Apple.
The company cited struggling iPhone sales in China when it cut its quarterly revenue forecast on Wednesday for the first time in nearly two decades.
While Huawei still has a way to go in catching up to Apple in terms of revenue, it is making huge inroads in markets across the globe and its high-end models are increasingly popular. The iPhone maker made a rare cut to its sales outlook Wednesday, blaming a bigger deceleration in emerging markets, especially China. In announcing the new forecast, Cook said the Chinese smartphone market is contracting and noted that foot traffic to Apple retail stores has been down in recent months. On its website in China, Apple now advertises the iPhone XR for 4,399 yuan with the trade-in of an iPhone 7 Plus. "Bernstein Liebhard wrote in their press release: "[On] November 1, 2018 during Apple's fourth quarter 2018 conference call, CEO Tim Cook stated that '[o] ur business in China was very strong last quarter. In the broader market, the S&P 500 futures fell 1.5 percent.
"I think there are a heck of a lot of USA companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year".
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PRECURSORS TO A WARNING Apple's move was not entirely a surprise. But he said then that he "would not put China in that category" of countries with troubled growth. We believe the economic environment in China has been further impacted by rising trade tensions with the United States.
Analysts are adding Apple's predictions and their effects to fears of an economic slowdown. Automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co Ltd all previously said they planned to cut production in the country.
"It's two-third what's happening in China and one-third Apple's pricing", said Gene Munster, managing partner at Loup Ventures, noting the weighted average iPhone price had jumped 23 percent with the release of the new models. USA stocks have tumbled over the last three months as investors anxious that the economy might slow down dramatically because of a variety of challenges including the trade dispute and rising interest rates.
In the latest fiscal year, ended September 29, unit sales of the iPhone were essentially flat from the prior year, while iPhone revenue expanded 18 percent to $166.7 billion.
Others advised Cook to stop pointing the finger at China, and instead fix the flaws in Apple services and work on new products.