Apple Cuts Their Revenue Forecast Due to Weakened China Sales

Tim Cook, CEO of Apple Inc., announced on January 2nd that they are cutting their sales forecast for their latest quarter because of iPhone sales in China that have drastically slowed down. China’s economy has been pulled down by the uncertainty around the U.S.-China trade relations.

The news caused Apple shares to fall in after-hours trading and started a broader sell-off in the stock market.

The revenue cut has prompted questions whether Apple Inc., the face of American businesses throughout the world, is currently being punished by either consumers or Chinese officials to favor rivals such as Huawei Technology. Huawei’s expensive smartphones compete with Apple’s iPhone, and the equipment is currently under banning review by U.S. officials.

Tim Cook advised that the Chinese government has not targeted Apple’s products, but many Chinese consumers have chosen not to purchase iPhone’s because of it being an American company. Cook also said that the more significant issue is the diminishing Chinese economy, followed by the U.S.-China trade tension that has added more pressure.

Many analysts have questioned the impact of Apple’s actions.

Apple, Inc. made a forecast of approximately $84 billion US for the first fiscal year which ended on December 29th. Apple’s first forecast revenue was between $89 and $93 billion US.

In a letter to investors, Tim Cook stated that Apple, Inc. did anticipate some challenges with emerging markets, but they didn’t expect the magnitude of the deteriorating economy in greater China. Cook also stated that the majority of Apple’s revenue shortage happened in greater China across Mac, iPhone, and iPad.

Apple shares, which were halted before Tim Cook’s announcement, stopped at 7.7 per cent during after-hours trading, which dragged the company’s overall market value under $700 billion US. The S&P 500 futures dropped 1.5 per cent in the broader market.

Wednesday is the first time that Apple has issued a warning referencing its revenue guidance before releasing their quarterly results since the launch of the iPhone in 2007.

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Apple Cuts Their Revenue Forecast Due to Weakened China Sales

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