Sunday , October 17 2021

Why Apple blames China for the collapse of its sales (and how true these accusations are)



Apple confirmed to investors a news bomb on Wednesday: its sales are shrinking (even more than expected). And, according to the American giant, China is to blame.

This was said by Apple CEO Tim Cook in a surprise revelation in which he predicted revenue from 84,000 million dollars for the last quarter of 2018, ended December 29.

And for the first time in more than 15 years, the company analyzes the economic results for investors.

fall of shares

Christmas season is the most successful quarter for Apple. But the estimated revenues for this year are almost 5% lower than those in the same period last year and expect First quarter of the company's 2016 fall.

After Cook's announcement, Apple shares fell 7.7 percent in just a few hours, widening the fall to 28 percent in November.

"Economic slowdown"

In the letter to investors, Cook said the problems the company faces is mainly due to China, a region in which it trusts about 20% of its revenue.

"Although we anticipate some challenges in key emerging markets, we did not foresee the extent of these economic slowdown, especially in China, "he said.

However, he added that in developed markets they also had problems because fewer customers than expected had chosen to update their iPhone.

Undoubtedly, IPhone sales are shrinking. And some analysts say Apple's new decline reflects some issues the technology company has been pulling for some time.

Tim Cook, Apple CEO. "Width =" 624 "height =" 351

Apple's chief executive Tim Cook accused China of "slowing down economic growth" in lowering sales.

"Uncertainty"

Cook's letter seems to confirm the doubts about the company's prospects that have worried investors over the past few months and are reflected in its decline in the stock market.

Cutting large suppliers has caused concern and has asked many questions whether the latest mobile phones manufactured by the company they did not attract enough to buyers, partly because of their high prices.

"Investor questions will be how much Apple's exaggerated prices have aggravated this situation and what it means for its power of pricing on the long-term iPhone, "said James Cordwell, an Atlantic Equities analyst for the BBC.

The company has already warned investors in November that the strengthening of the dollar and economic weakness in some foreign markets could affect its sales in the last quarter of the year.

Some analysts also pointed out that Apple is vulnerable to its effectsTrade war between the United States and China, partly because tensions could cause Chinese buyers to opt for national brands instead of Americans.

And the cheapest alternatives such as Oppo, Huawei and Xiaomi They are improving.

Apple Graphics

"After iPhone 8, technological advances have begun to stagnate, so consumer incentives to buy a new iPhone have declined," said Taiwan-based analyst Sam Reynolds for the BBC.

Reynolds argues that Android phones such as Pixel Google, Flagship-X Oppo or Huawei P20 Pro "are simply more exciting products for that price range."

However, Apple says in its letter that trade tensions affect consumer confidence.

"As the climate increasing uncertainty are on the financial markets, the effects seem to reach consumers as well. Activity in our stores and our Chinese partners has fallen as the quarter progressed, "Cook said.

He also explained that Apple is taking measures to facilitate the sale of his phones in this part of the world and that other parts of his business are still strong in the region.

"While it is disappointing to review our forecast of results, our performance in many areas has shown remarkable strength despite these challenges," added Cook.

Analysis: Dave Lee, technology correspondent for North America

You can summarize what Cook told investors: some things are under Apple's control … and others are not.

China's economic reality – where there is a slowdown in economic growth – means that a region that Apple has full confidence in winning new customers will not give that momentum. If we add this to the trade war between China and the United States, things can go worse.

There are very few things that Cook can do to protect Apple's business, apart from using pressure groups to exert influence. And that's already done.

But it is more important that is essential in all of this. the gold age of smart phones, a period that has made Apple the richest company in the world, is coming to an end.

This is not new. But it happens faster than Apple anticipated.

Better devices with more durable and reliable batteries make people unwilling to update their mobile phone and ask, "What was new from the latest iPhone model?" Not too much. It is not enough.

Will other Apple products and services be enough to support its market position?

The company is trying to diversify for some time with products such as Apple Watch and cloud services that have grown rapidly, but are far from reaping the successes of the iPhone.

Some commentators are now waiting for the company to make a major purchase so investors can renew their optimism.


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