Apple’s Stock Plunges
Apple had some news for investors to ring in 2019, only it wasn’t good. The company’s revenue this quarter will be significantly lower than it had previously indicated, thanks largely to a slowdown in China sales. Apple’s shares were halted after the stock market closed Wednesday. Then CEO Tim Cook posted a letter on Apple’s web site saying that revenue in the last quarter of 2018 would be $84 billion.
That figure is 4.8% below the $88.3 billion revenue in the same quarter a year earlier. It’s also far short of the forecast Apple gave investors only two months ago, which saw revenue in the quarter coming in between $89 billion and $93 billion.
“Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall,” Mr. Cook said in his letter. The move also was an inauspicious signal for markets on the first trading day of the year, with Apple shares after hours declining more than 7% and the broader market showing stress as well.
The company has lost more than $300 billion in market value since peaking above $1 trillion in early October. Last year was Apple’s worst yearly performance since the financial crisis. While Mr. Cook pointed to China’s economic turmoil for the revenue shortfall in the quarter ended Dec. 29, Apple’s share of the Chinese smartphone market has been shrinking, crowded out by tech giants such as China’s Huawei Technologies Co. that market increasingly sophisticated phones at a lower price tag.
As Apple looks to reignite iPhone sales in the future, Mr. Cook said it would simplify the process for trading in phones and financing purchases of the devices. Apple had seemed to have regained its footing last year in China following a steep downturn in 2016 and 2017. Revenue there had been accelerating in recent quarters even as the Chinese economy weakens. Sales in Greater China, which includes Hong Kong and Taiwan, rose 16% to $11.41 billion in the quarter ended in September.