Apple warns investors to expect weaker profit, blaming China's worsening economy

Image Source Saim_Ray010 Reddit

Apple's stock closed official trading up 0.1% at $152.92 a share.

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.

Apple stock was halted in after-hours trading just minutes prior to the announcement.

Cook said other factors will also pull down Apple's revenue, including the timing of its iPhone launches previous year and a strong dollar that means lower revenues when converted to USA currency.

Apple now forecasts $84 billion Dollars (about $114 billion CAD) in revenue for the first quarter of 2018, a number that already sits below estimates of $91.5 billion ($124 billion CAD) based on BES data from Refinitiv, according to Reuters.

iPhone-maker Apple tells investors that it will miss revenue estimates by $9 billion owing to weak demand in Asia, especially China.

On Apple's earnings call in November, Cook cited slowing growth in emerging markets such as Brazil, India and Russian Federation for the lower-than-anticipated sales estimates for the company's fiscal first quarter.

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Slowing sales in China isn't Apple's only problem - results have been less than stellar in other markets as well.

On Friday, a report by Reuters news agency - citing an internal company memo - said that the Huawei staff involved in the Twitter blunder had been demoted and would be receiving reduced salaries. Automakers such as Ford Motor Co, Hyundai Motor Co and Nissan Motor Co all previously said they planned to cut production in the country.

Like other luxury brands, Apple's sales are largely tethered to the Chinese economy - which began to slow in the second half of 2018. Apple has priced itself out of the market.

Investors learned of the news in a letter sent to them by chief executive Tim Cook on Wednesday afternoon (New York time).

Apple's boss also told investors he believes the company has a bright future in China - but the US-China trade war was a contributing factor to the weaker results. "This turned out to have a significantly greater impact than we had projected", Cook said in the letter.

Peter Richardson, a research director at Hong Kong-based Counterpoint Research, said it was hard to see a catalyst that would help Apple recover lost ground in China.

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