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Apple shares plunge almost 10% behind revenue warning

05 Janvier 2019

The drop in sales was also not entirely a surprise. In late December, the promotional program for the new models went live in China, adding one major perk: users in China cannot only trade in their old iPhones, but also Android phones made by Apple's major competitors in China, including Huawei, OPPO and Xiaomi.

Apple's decisions over the coming months around pricing, future hardware redesigns, timing of 5G smartphones, and driving its core services business will have implications for years to come as Cupertino now faces the biggest fear among bulls which is an installed base (we estimate roughly 750 million active iPhones worldwide) that could stall out and not grow over the coming years and in a nightmare scenario decline. Apple CEO Tim Cook issued a warning Wednesday that the iPhone maker will badly miss its revenue forecast for the first time in over 15 years. Not only is there increased direct competition, but there are also now a huge number of highly capable alternatives to the iPhone available at a significantly lower price.

Cook in November had cited slowing growth in emerging markets such as Brazil, India and Russian Federation when Apple gave first-quarter sales estimates that were lower than expected. As of Thursday, Apple's share price was at $142, which is nearly 40 percent less than its $232 high from October. The Apple brand is extremely strong - Interbrand, for example, names it the most valuable brand on the planet.

Conversely, on November 1, 2018 CEO Tim Cook stated during Apple's fourth quarter 2018 conference call, that "o$3 ur business in China was very strong last quarter". On Thursday it was also announced that Apple is likely to remove some iPhones from stores in Germany, as Qualcomm moves to enforce an earlier court order banning the sale of some iPhone models in the country.

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

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.

So, not only is the overall smartphone market just not a fast-growing one, but Apple's corner of it - lucrative as it is - looks set to become a smaller portion of the overall market.

Among big industrial companies, Caterpillar gave up 3.9 percent to $121.51, and Deere lost 2.7 percent to $144.05.

"When the largest and second-largest economies in the world get into a trade dispute, the rest of the world's going to feel the effects". Copper, which is used in construction and wiring, fell 2.1 percent to $2.57 a pound. It expects last year's total Chinese purchases to shrink by 8 percent to 9 percent compared with 2016.

Technology stocks led the declines with chipmakers and other phone part suppliers both in the U.S. and around the world in the red. Delta sank 7.6 percent. Skyworks Solutions Inc. fell as much as 6.6 per cent, while Broadcom Inc. slid 5 per cent and Qorvo Inc. dropped 5.2 per cent.

In other commodities trading, wholesale gasoline rose 1.8 percent to $1.35 a gallon and heating oil climbed 2.4 percent to $1.74 a gallon.

Apple shares plunge almost 10% behind revenue warning