Published: Sat, January 12, 2019
Economy | By

Battery Replacements are hurting iPhone sales

Battery Replacements are hurting iPhone sales

Suppliers for Apple took a stock market hit after the tech company warned investors it was lowering its first quarter revenue forecast, Financial Times reported.

China's "economy began to slow there for the second half", Cook said during an interview with CNBC on Wednesday afternoon.

This marked the first time Apple had issued a warning on its revenue guidance ahead of releasing quarterly results since the iPhone was launched in 2007.

A woman looks at the screen of her mobile phone in front of an Apple logo outside its store in Shanghai, China July 30, 2017. In the USA government bond market, a typical safe-haven, the yield on the benchmark 10-year, which moves inversely to the bond's price, sank to an 11-month low.

Some of the reasons for the weak iPhone upgrades in the first quarter were price increases based on the strength of the U.S. dollar, fewer carrier subsidies and cheaper battery replacements.

Apple now estimates that the quarterly sales will only come in at $84 billion - or about about $4 billion less than what the company raked in a year ago.

The company's shares were briefly halted after hours before Cook's letter was made public, and fell as much as 8% when trading resumed.

iPhones are some of the most compact smartphones on the market.

"We estimate if China sales went to zero that would reduce iPhone units by -44m and approximately ~$20-$30 per share in Apple stock price", the note stated.

While President Donald Trump's trade war with China isn't helping Apple and other US technology companies, Ives believes Apple miscalculated by continuing to roll out high-priced phones in China, creating an opening for rivals with less costly alternatives that still worked well. "The trade tensions between the United States and China put additional pressure on their economy". That wiped up to $55 billion off of the company's stock market value.

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.

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. "While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including 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 in the letter.

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