Trump advisor says China stole Apple technology, but provides zero evidence

Apple Earnings Warning

Apple Earnings Warning

The rare warning of disappointing results from Apple reinforced investors' fears that the world's second-biggest economy is losing steam and that trade tensions between Washington and Beijing are making things worse. Apple shares plummeted almost 8 percent in after-hours trading and pulled down a bevy of consumer stocks with exposure to the Chinese market.

Market analysts believed that Apple's products like iPhones in China are facing strong competition from many Chinese home-grown smartphone rivals including Huawei and Xiaomi, whose smartphones are much cheaper than iPhones. On its website in China, Apple now advertises the iPhone XR for 4,399 yuan with the trade-in of an iPhone 7 Plus.

A senior White House economic adviser said he expected trade uncertainty to hit earnings at many USA companies, but that sales at Apple and others with large exposure to China would recover once Washington and Beijing strike a trade deal.

"The gut reaction here feels oversold", said Mike Bailey, the director of research at FBB Capital Partners, which owns shares of Apple.

But Apple's new $1,000 iPhones are a hard sell to Chinese consumers anxious about the economic future, as trade tension continues between China and the United States.

Apple had previously estimated it would earn revenues of $89 to $93 billion in the most recent quarter.

Follow Michael on Twitter. Other brand names such as Ford Motor Co. and jeweler Tiffany & Co. already have reported abrupt declines in sales to Chinese buyers. 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, U.S. dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.

Mark Zandi, chief economist at Moody's Analytics explained to The New York Times, "Apple is a bellwether".

"Apple was at a number that was incredible and they're gonna be fine; Apple is a great company".

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The weakening will also likely slow the Federal Reserve's interest rate hikes, which will weaken the US dollar.

Apple took its biggest loss in six years Thursday and ended at $142.19.

"Futures immediately sold off. Apple is a 4 per cent position in the market and considered a bellwether and comments were that the USA was fine, China was slower than expected".

"Don't forget this: Apple makes their product in China", Trump said.

That spells trouble for companies that rely on China's enormous market to boost their global sales.

"I think the trade war had a lot to do with this", Zino said.

The US tech giant itself was hit by Thursday's sell-off with its stock tanking 9.96 percent. Still, the threat of from China against Apple due to Trump's trade war lingers in the air.

"While we continue to expect Apple to be focused on the Indian market, it will only find limited traction in the near term", Fitch Solutions said.

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