Economy

Apple puts Wall St on the alert after 'darkest day'

Apple puts Wall St on the alert after 'darkest day'”

The memo, aimed at pepping up staff after cutting its revenue outlook for the first time since 2002, reiterated Cook's note to investors that it missed its target due to lower than expected iPhone sales in China. Nevertheless, the relatively poor earnings performance has depressed Apple's share price by about 8% recently, and may have had a knock-on effect on other tech stocks.

"The question for investors will be the extent to which Apple's aggressive pricing has exacerbated this situation and what this means for the company's longer-term pricing power within its iPhone franchise", said James Cordwell, an analyst at Atlantic Equities.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook wrote.

Suppliers in Europe and Asia slumped on the news.

The promotion in China is available until January 31, around the same time the iPhone maker is expected to release its fiscal first-quarter earnings. "Blaming macro weakness and trade concerns is obfuscation".

In December, Bloomberg News reported the company was facing a "fire drill" to boost iPhone sales. "Apple is just outpricing itself-not only in the iPhone market, but also in the MacBook Pro market".

Apple finished the day down 9.9 percent, at $142.19.

Any new product offering from Apple is unlikely to be revealed before September, when the company traditionally unveils its new iPhones.

Kevin Hassett, chairman of the White House council of economic advisers, said that U.S. companies selling in China would see their sales recover if the trade dispute is resolved. 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. The second largest economy is slowing, and could be a convenient excuse for companies missing forecasts, but two veteran global investors say Apple's problems are largely self-inflicted, not a harbinger of a looming catastrophe in emerging markets.

"This is just another little tea leaf as to the goings on behind the curtain in China and last night's PMI coming out weaker than people thought", said Kevin Caron, a senior portfolio manager at Washington Crossing Advisors. The news comes as US earnings season looms around the corner.

While President Trump's trade war with China isn't helping Apple and other USA technology companies, Mr Ives believes Apple miscalculated by continuing to roll out high-priced phones in China, creating an opening for rivals with less costly alternatives that still worked well. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week.

Cirrus Logic, which makes audio chips for Apple products, dropped 7 percent. Services generated $10.8 billion in revenue for the quarter - a 27 percent increase from a year earlier. While a number of things can influence a user's decision to upgrade their smartphone, Cook cited Apple's "significantly reduced" iPhone battery replacements as one reason why some have chosen to stick with their current models.



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