For its fiscal first quarter ended December 29, the tech giant now expects revenue of about $84 billion.
In a letter to investors, Apple CEO Tim Cook pointed to a slowing economy, particularly in China. Its stock fell 10 per cent Thursday, the worst drop in five years, wiping out about $75 billion in market value.
Some Chinese netizens and companies have also turned against Apple. Other brand names such as Ford Motor Co. and jeweler Tiffany & Co. already have reported abrupt declines in sales to Chinese buyers. The tech-driven Nasdaq composite index now stands 18 per cent down from its record closing high reached in August.
Changes in smartphone buying trends in China, and Apple's falling market share there, were obvious, but Apple brushed off any concerns or ignored reality.
Global stocks rose Friday and Wall Street was set to open higher after heavy losses this week, as investors welcomed news of trade talks between the US and China and braced for U.S.jobs data.
Cook's comments papered over the reality that Apple not long ago was the top-selling smartphone maker in China and slipped to fifth in the second quarter of 2018.
He said many companies have a lot of sales in China and will "be watching their earnings downgraded next year until we get a deal with China". "I mean, look, they've gone up a lot". "People are anxious about losing jobs", she said. China makes up one-third of the industry's shipments worldwide.
With no evidence or context provided whatsoever, it appears that Kudlow is trying to deflect any blame for Apple's poor stock performance away from Trump and onto China. It expects last year's total Chinese purchases to shrink by 8 per cent to 9 per cent compared with 2016.
This piles on to existing anxiety of a slowdown in global growth, Apple can be used as a proxy to China's growth. According to the Apple CEO, the slowdown was exacerbated by Trump's trade war with Beijing.
The slump is a setback for the ruling Communist Party's efforts to nurture self-sustaining, consumer-driven economic growth and wean China from its reliance on exports and investment.
The warning rattled already-volatile U.S. markets, further feeding worries about global economic growth that have dragged on stocks in recent weeks and turned 2018 into the worst year since the financial crisis for Wall Street. Moving it out of China would be extremely hard and highly unlikely. At the same time, Beijing has sought to relieve the economic pain with higher government spending.
Kay said the trillion-dollar valuation was "irrational" and based on growth projections Apple is unlikely to achieve without a new catalyst. They're supplying devices that compete on quality at much more affordable prices, and have set up huge local manufacturing operations to avoid tariffs and keep costs down. First, as my colleague Evan Niu wrote about the smartphone market in December: "What little growth ... is left is being driven by low-priced handsets from Chinese vendors". Soft real estate sales have forced developers to cut prices. It jacked up its prices in India a year ago after the government raised smartphone tariffs from 15% to 20%.
Sales to the US market have held up despite President Donald Trump's punitive tariffs on $250 billion of Chinese goods, rising 12.9 per cent in November over a year earlier.