Apple blames revenue slump on slowing Chinese economy as iPhone sales slow

Apple blames revenue slump on slowing Chinese economy as iPhone sales slow

Apple Inc AAPL.O shares plunged 10 percent on Thursday after the iPhone maker blamed weak China demand for a holiday-quarter revenue shortfall, with many investors anxious the rare stumble was a harbinger for slowing global growth.

Apple's report startled investors who fear a slowdown of the world's second largest economy amid pressure from a trade dispute between Washington and Beijing.

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

The company now expects revenue of around $84 billion (£67bn) for the October to December period, well below previous predictions of up to $91bn (£72bn).

Some analysts point to Apple's dependence on iPhone sales to drive revenue and profits, even as it tries to diversify its product base and add services such as music and digital payments. "It will be interesting to see how Apple shares react if there's a China trade agreement".

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Now the ongoing trade war between the USA and China may be having even more of an impact.

On the other hand, Cook also stressed that Apple showed considerable strengths in other areas (particularly in its cash assets: the company is now sitting on about $130 billion). That sparked concern Apple wanted to avoid disclosing weak growth numbers.

Of course, it is nothing to do with Apple or the fact people don't seem to feel the need to pay over the odds for technology they can buy for less when last year's phone worked fine.

Apple has warned that disappointing iPhone sales will cause a significant drop in its revenue over the crucial holiday season compared to earlier projections.

Shares in the technology giant fell seven per cent in after-hours trading following the surprise announcement from chief executive Tim Cook. 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.

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"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.

Lately, Apple has been offering a trade-in deal for the $749 iPhone XR that will cut the price as low as $449.

The German case, part of a global patent spat between the two companies, is Qualcomm's third major effort to secure a ban on iPhones over patent-infringement allegations after similar moves in the United States and China. Apple has been steadily raising the price of its newest and most powerful iPhones each year, with some models now topping $1,000.

Apple is one of the most powerful tech companies on the planet.

Apple also cited supply "constraints" for some products, including its latest Apple Watch and iPad Pro.

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

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