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Weak performance in China has forced Apple to lower its quarterly revenue guidance for the first time in 15 years. Pricing pressures from competitors like Huawei, and broader economic problems in China could be to blame. I’ve noted before that Apple’s pricing has cost the company heavily in India, and the same issues could be at the heart of its problems in China. Earlier this year there was some warning for investors that Apple was having trouble selling its phones when the company inexplicably ceased reporting unit sales of its products.
On the latest troubles for Apple in China, Robert McMillan and Tripp Mickle report for The Wall Street Journal:
The surprise cut, issued Wednesday in a letter from the chief executive to investors, renews concerns about waning demand for Apple’s marquee product, the iPhone, which makes up the vast share of its revenue and has vaulted the company’s value and profits. It also raises fresh questions about Apple’s prospects in China, the world’s largest smartphone market, which represents nearly 20% of Apple’s sales.
And it was the latest sign of broader economic malaise in China, fueled by trade tensions with the U.S.
“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall,” Mr. Cook said in his letter.
The move also was an inauspicious signal for markets on the first trading day of the year, with Apple shares after hours declining more than 7% and the broader market showing stress as well.
The company has lost more than $300 billion in market value since peaking above $1 trillion in early October. Last year was Apple’s worst yearly performance since the financial crisis.
While Mr. Cook pointed to China’s economic turmoil for the revenue shortfall in the quarter ended Dec. 29, Apple’s share of the Chinese smartphone market has been shrinking, crowded out by tech giants such as China’s Huawei Technologies Co. that market increasingly sophisticated phones at a lower price tag.
Read more here.
