Dow Falls 660 Points as Apple Stokes Global-Economy Worries

Dow Falls 660 Points as Apple Stokes Global-Economy Worries

Dow Falls 660 Points as Apple Stokes Global-Economy Worries

Fallout from the Apple news also caused chip stocks such as Advanced Micro Devices, Nvidia and Qorvo to fall, along with Skyworks which dropped more than 10 percent.

Apple has recognized its pricing in China may be too high, expanding a recent iPhone trade-in promotion from the the region at the end of December.

"While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China", Cook wrote, noting that "most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China". In November, the company said it would stop reporting unit sales of iPhones, iPads and Macs beginning in fiscal 2019. Apple's stock had fallen 32 percent from an October peak to its close of $157.92 Wednesday amid growing concerns about the iPhone. Trade tensions between the two have dragged on for almost a year and uncertainty over their outcome has dragged down stock indexes around the world.

Cook's letter rattled investors, with analysts calling it a "bombshell".

Apple has finally confirmed what industry onlookers have known for months: It is experiencing a "challenging quarter" thanks to lower-than-expected sales of its newest iPhones. "The iPhone is something that everyone knows and buys, and if people aren't buying it, then it's a pretty good sign they're having a hard time".

"IPhone upgrades also were not as strong as we thought they would be", he said, meaning the sales of new models to current customers replacing their old phones.

The statement from one of the world's largest companies will further rattle investors already anxious about the slowing Chinese economy.

The CEO attributed much of the company's "shortfall" in its outlook to struggles in China that he pinned on the economy and "rising trade tensions" with the U.S. The company also sees the traffic to retail stores and partner sellers in China declining in the quarter. With iPhone's production lines in China, Apple has been caught in between the world's two largest economies.

"That is having an impact on earnings and it's not going to be just Apple", White House Chairman of the Council of Economic Advisers Kevin Hassett said in an interview with CNN.

Many analysts and investors had anxious about a slowdown in iPhone sales since the company said in November it would stop disclosing unit sales data for its phones and other hardware products. The news comes as US earnings season looms around the corner.

KitGuru Says: I still like both the iPhone and the iPad but Apple's price increases over the last few years have been taking a toll. Apple estimated that it would make $91 billion over the last quarter, but has since revised this to $84 billion in revenue, with a gross margin of 38 percent. On its website in China, Apple now advertises the iPhone XR for 4,399 yuan with the trade-in of an iPhone 7 Plus.

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