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Apple needs cheap iPhone to crack India

05 January, 2019, 03:56 | Author: Melinda Barton
  • Dow suffers another drop after Apple sends shock waves with warning of weak sales

Chief Executive Tim Cook blamed the unforeseen "magnitude of the economic deterioration" in China, the world's largest smartphone market.

Fears over the impact of Donald Trump's trade spat with Beijing have been among the key factors that saw the FTSE 100 and wider global markets endure their worst year in 2018 since the financial crisis.

USA shares fell after Apple CEO Tim Cook told shareholders after markets closed Wednesday that Chinese iPhone sales were slipping.

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 issued a rare revision to its earnings guidance earlier this week, cautioning investors that the company is anticipating to generate a few billion dollars less in revenue than initially expected.

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. "Until it changes this pricing strategy, it is unlikely to see market share growth and will most likely see a gradual contraction as iPhone users upgrade at slower rates", said Richardson.

The lawsuit's bottom line: "As a result of Defendants' wrongful acts and omissions, and precipitous decline in the market value of Apple's securities, Plaintiff and other Class members have suffered significant losses and damages".

Another question mark for Apple is its 5G strategy in China, where the US firm is not expected to have a 5G-enabled phone until 2020, behind rivals like Huawei, Xiaomi Corp and Samsung Electronics. China is also one of Apple's most important markets, once referred to as a "hypermarket" by Cook. "As growths in China and Eurozone have been clearly slowing, investor fears that moderating global demand will start to dampen USA growth momentum", she added.

Apple CEO Tim Cook said in a letter to investors earlier in the day that the contraction in China's smartphone market has been "particularly sharp". "We believe the economic environment in China has been further impacted by rising trade tensions with the United States".

Apple shares slid some 7.6 per cent in after-hours trade on the news.

"Assembly in India is important for Apple as it seeks to grow revenues in the Indian market", analysts at research firm Fitch Solutions wrote in a note this week.

US government bond prices surged, sending yields to their lowest level in nearly a year, and gold and high-dividend stocks like utilities also rose as investors looked for safer places to put their money. But, he noted that Apple "appears to have lost material share in China in Q4 despite its new product launch, and that Apple has struggled in China before, underscoring the fickleness and lower lock-in of Chinese consumers".

Apple's latest comments fuelled worries that its relatively high-priced devices may be falling out of favour in China, where rivals such as Huawei Technologies Co Ltd [HWT.UL] offer cheaper options. The Trump administration responded by Apple products from the tariffs.

Which leads on to the next obvious question - How many iPhones are being junked or recycled just because they need a new battery?

The yield on the 10-year Treasury fell to 2.64 percent.



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