Apple makes shock sales warning as US-China trade war hits

Chinese police sit in their vehicle as it is parked outside an Apple store at an outdoor shopping area in Beijing Tuesday Sept. 25 2018. A Chinese trade envoy said Tuesday that talks with Washington are impossible while the United States

Chinese police sit in their vehicle as it is parked outside an Apple store at an outdoor shopping area in Beijing Tuesday Sept. 25 2018. A Chinese trade envoy said Tuesday that talks with Washington are impossible while the United States"holds a knife

In a letter to investors, Apple CEO Tim Cook revealed some of the reasons why the first-quarter earnings are weaker than expected ahead of its earnings call scheduled for January 29.

The chief executive pointed to slowing growth in China, the world's second-biggest economy, as the key factor.

Back in late 2017, Apple confirmed that it was throttling iPhone performance.

People walk past an Apple store in Beijing on Dec 11. President Donald Trump has also raised new tensions between the USA and China by imposing tariffs on more than $200 billion in goods, although so far the iPhone hasn't been affected directly.

He also pointed to a lower than expected number of iPhone upgrades in some developed markets and said the tech firm had launched an initiative to make it easier to trade in handsets in stores, finance the purchase over time, and get help transferring data.

Much of the damage occurred this week when Apple revised its revenue expectations down to approximately $84 billion for Apple's fiscal 2019 first quarter.

Mr Cook also acknowledged that consumers in other markets are not buying as numerous latest iPhones, released last fall, as Apple had anticipated. Apple's troubles may have ripple effects on other technology companies, given investors have been bailing on the industry in recent months.

Apple ended Wednesday's session with a share price of $157.92, which was already a 30% decline from an all-time high of $227.63 on August 27.

AMS, a European chipmaker that supplies Apple, saw its shares drop almost 20% after Apple warned of slowing iPhone sales.

Mr Cook said Apple's revenue for the quarter including the crucial holiday shopping season will fall well below Apple's earlier projections and those of analysts, whose estimates sway the stock market. But Cook specifically said he "would not put China in that category" of countries with troubled growth.

China is not only the problem for Apple.

"We believe the economic environment in China has been further impacted by rising trade tensions with the United States", Cook added.

SAN FRANCISCO-Apple acknowledged that demand for iPhones is waning, confirming investor fears that the company's most profitable product has lost some of its luster.

In his letter, Cook said Apple has $130 billion in net cash and that it intends to continue its efforts to reduce that cash balance to net zero, which the company has so far accomplished through dividend increases and share buybacks.

Cook said that lower than anticipated iPhone sales, primarily in Greater China, accounted for all of the company's revenue shortfall compared to previous guidance.

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