Apple Cuts Guidance For Quarter, Citing Low iPhone Upgrades

An Apple store in China

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Apple Inc. today sent tremors through the tech industry and Wall Street after slashing its sales forecast for the first time in 17 years.

Economic experts have blamed Chinese consumer concerns on the country's tariff dispute with the United States as well as an increase in news about falling automobile and real estate sales in China.

Later in the missive, however, Steve Jobs former right-hand man would admit that the iPhone has also fallen short of expectations, both in its emerging and established markets around the world.

The Dow shed more than 500 points on Thursday morning. Cook said the company expects revenue of $84 billion in the last quarter of 2018, $7 billion less than analysts had forecast. Reports claimed the company cut orders by as much as 50 percent, especially for the iPhone XR whose sales are the worst impacted this year.

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In a letter to investors Wednesday, CEO Tim Cook explained that Apple is grappling with several issues, many related to China.

Analysts also highlighted that Apple was vulnerable to the effects of the US-China trade spat, in part due to risk that the tensions could cause Chinese buyers to sour towards US brands.

Still, some local players managed to grow against the trend and they may be eating into Apple's market share. "There are a heck of a lot of USA companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China". 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.

Apple chief executive Tim Cook said in a letter to shareholders, published after the close of trading on Wednesday, that it "did not foresee the magnitude of the economic deceleration" in China.

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About six months ago Apple became the first publicly traded company in the world to see its value surpass the trillion-dollar mark.

Trump had more to say beyond promising that the company would be fine in the long run.

Shares of the iPhone maker cratered almost 8 percent in extended trading Wednesday - knocking some $50 billion off the market cap after the company took the unusual step of cutting its revenue guidance. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week.

In November, Cook cited slowing growth in emerging markets such as Brazil, India and Russian Federation for a lower-than-anticipated sales estimates for the company's fiscal first quarter. To wit, sales of services (like Apple Music and iCloud) generated more than $10.8 billion in revenue during the quarter, Apple said, growing to a new quarterly record in every geographic segment.

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