"Can't Beat Market Forever": Analyst On Apple's Trillion-Dollar Question

Devin Lawrence
January 5, 2019

Qualcomm, which requested the ban, said last month that the Fuzhou Intermediate People's Court ordered four Apple subsidiaries to stop selling older models of the iPhone, including the 7, 7 Plus, 8, and 8 Plus. In his letter, Cook said that more than 100% of the company's worldwide revenue decline was in China for sales of iPhones, Macs and iPads.

"That is having an impact on earnings and it's not going to be just Apple", White House Chairman of the Council of Economic Advisers Kevin Hassett said in an interview with CNN.

"No, I'm not", he replied. You know, they've gone up hundreds of percent since [I've become] president. Chinese consumers could be less willing to part with their cash for the latest smartphone or luxury handbag as they tighten their belts.

But not everyone is so certain.

Chief Executive Tim Cook blamed the unforeseen "magnitude of the economic deterioration" in China, the world's largest smartphone market.

Stocks went into a steep slide after Apple reported a slowdown in iPhone sales over the holidays in China, a hugely important market for the company. The uptick comes a day after the stock shed 9%.

Apple iPhone
Apple stock plummeted 10% erasing more than 74 billion dollars in market value

Trump had more to say beyond promising that the company would be fine in the long run.

Apple tried to soften the blow on Thursday by saying that spending in the company's app store hit a record high of more than $1.22 billion during the recent holiday season, but it wasn't enough to soothe anxious investors. "Look, I have to worry about our country". Developments in a patent dispute between Apple and Qualcomm in Germany also rattled investors.

"I told Tim Cook, who's a friend of mine who I like a lot, make your product in the United States", Trump added. "Build those big lovely plants that go on for miles it seems, build those plants in the United States". Build those plants in the United States.

"China's economy is definitely slowing quite a bit across a bunch of sectors, and this slowing momentum is likely to continue for another couple of months at least", said Arthur Kroeber, the founder of Gavekal Dragonomics, a research firm in Beijing. "Until it changes this pricing strategy, it is unlikely to see market share growth and will most likely see a gradual contraction as iPhone users upgrade at slower rates", said Richardson. But, he noted that Apple "appears to have lost material share in China in Q4 despite its new product launch, and that Apple has struggled in China before, underscoring the fickleness and lower lock-in of Chinese consumers".

He also cited other factors that contributed to the drop in iPhone revenues such as consumers adapting to a world with fewer carrier subsidies, price hikes resulting from a stronger US dollar, and lower price for iPhone battery replacements.

Tariffs on imported smartphones, a ban on Apple Stores in India and the weakness of the Indian rupee against the USA dollar have hobbled the Silicon Valley giant.

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