Apple shares drop after news of waning iPhone sales

Sheri Evans
January 5, 2019

A senior White House economic adviser said he expected trade uncertainty to hit earnings at many USA companies, but that sales at Apple and others with large exposure to China would recover once Washington and Beijing strike a trade deal. In his letter, Cook said that more than 100% of the company's worldwide revenue decline was in China for sales of iPhones, Macs and iPads.

Apple stock plummeted 10 percent, erasing more than $74 billion in market value.

Shares of the Cupertino, Calif. -based tech giant slid almost 10 percent on Thursday - wiping out more than $75 billion in market cap and knocking it back to No. 4 among the world's most valuable companies - after it warned of slower-than-expected iPhone sales.

"The iPhone has been supporting the company for than a decade", said Roger Kay, analyst at Endpoint Technologies Associates.

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Apple, which was until recently the largest publically trade company in the United States, is now worth less than Microsoft, Amazon and Google's parent company, Alphabet.

Apple shares were down 9.8 percent at $142.40.

Although Cook pointed fingers at China almost a dozen times in his letter, many analysts believe Apple's underlying issues are far more complex than a slowdown in one market. Build those plants in the United States.

The lack of a breakthrough product surely contributed to Apple's not-so-hot outlook.

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What's worse for oil prices, however, is the fact that factory activity slowed down across all of Asia , not just in China. Brent settled up 59 cents, or 1.1 percent, at $53.80 a barrel, while WTI settled 8 cents higher at $45.41 a barrel.

According to a Reuters report, Apple reduced its forecast to $84 billion in revenue for the fiscal first quarter that ended on December 29.

"Apple stock is now at a crossroads", said a research note Thursday from Gene Munster and Will Thompson of the investment firm Loup Ventures.

Over the past year, the U.S. and China slapped new tariffs on hundreds of billions of dollars' worth of imports in a trade war that threatens to snarl multinational companies' supply lines and reduce demand for their products.

China-based smartphone maker Huawei - a company that could be on track to surpass Apple in terms of overall smartphone unit shipments in 2019 - is gaining traction with its high-end P-series and Mate-series devices.

The stock market can at times be fickle and reactive, but in this case, Apple's struggles may be indicative of a larger global economic trend. Not for the $1,100 price tag, mind you, but rather the ungrateful carriers who weren't willing to torch their share of the profits and consumers who wanted to fix their suddenly dying batteries. The Apple brand is extremely strong - Interbrand, for example, names it the most valuable brand on the planet.

Despite all that, Apple continues to face fierce competitive pressure from Android smartphone makers trying to move into the premium portion of that market - and I don't see that abating in 2019.

"I think the trade war had a lot to do with this", Zino said.

"The question now is will Apple change its strategy or stick to its hubris", Ives said. The revenue revision, which came late Wednesday, led markets lower around the world and also triggered a slump for Asian suppliers and a wave of lower price targets from Wall Street.

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