Trump to Apple: Make the iPhone in the USA, not China

Ann Santiago
January 5, 2019

The company cited struggling iPhone sales in China when it cut its quarterly revenue forecast on Wednesday for the first time in nearly two decades. Secondly, Tim Cook thinks the weakening USA dollar is to blame for Apple's lowered profits, as well as the company's flagship device, the iPhone, experiences its worst sales run in recent memory due to competition from overseas.

Apple's CEO Tim Cook blamed slowing sales in China and the battery replacement program.

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".

Apple said China sales came in lower than expected in the quarter ending December 29 when it revised its revenue estimate downward.

"China is the biggest beneficiary of Apple, more than us". Revised revenues would be approximately $84 billion, the Wednesday letter said.

"The argument could be made that they to some extent priced themselves out of the market", said Tom Forte, an analyst at D. A. Davidson. (AAPL) are down more than 9% in NY trading after the company announced it will miss its revenue forecast for the critical holiday quarter. But the news has also had a dramatic impact on the value of companies around the world who supply to Apple - and they are not necessarily in as strong a position to shoulder the drop. Samsung, Apple's perennial rival in the premium portion of the smartphone market, is also said to be planning some fairly dramatic changes to its upcoming Galaxy S-series devices, too.

This represents the biggest stock market dive since 5 December when United States stocks suffered a dramatic decline; the Dow Jones fell 800 points back then due to renewed concerns over Washington's trade dispute with China and indications of a possible looming economic recession. Other brand names such as Ford Motor Co. and jeweler Tiffany & Co. already have reported abrupt declines in sales to Chinese buyers.

"They're gonna be fine", Trump said at a Friday news conference at the White House.

Factors impacting iPhone sales include "consumers adapting to a world with fewer carrier subsidies, United States dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements", Cook wrote.

The news caused Apple stock to trade sharply lower. "There's a hole in Apple's product portfolio - they do not have a low-cost smartphone to fully exploit emerging markets". "There are a heck of a lot of USA companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China".

Oil prices edged higher.

Shares of USA -based Apple suppliers and chipmakers including Cirrus Logic Inc CRUS.O , Skyworks Solutions Inc SWKS.O , Analog Devices ADI.O , Broadcom Inc AVGO.O , NXP Semiconductors NV NXPI.O and Micron Technology Inc MU.O all tumbled.

Peter Richardson, a research director at Hong Kong-based Counterpoint Research, said it was hard to see a catalyst that would help Apple recover lost ground in China.

Overall, export growth decelerated to 5.4 percent over a year earlier, less than half October's 12.6 percent rate.

CEO Tim Cook told investors that come January 29, the phone-flinger won't hit the revenue figures it said it would reach, and would in fact see its first year-over-year decline since 2016.

The yield on the 10-year Treasury fell to 2.64 percent.

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