Apple’s rare warning on revenue rocked financial markets on Thursday, reigniting concerns about slowing global economic and corporate growth and potential damage from Washington’s protracted trade row with Beijing.
''Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline'' said Apple CEO Tim Cook in a letter to investors.
'We did not foresee the magnitude of the economic deceleration, particularly in Greater China'
Asian and European shares fell sharply, led by a sell-off in technology stocks, and U.S. stock futures pointed to a weaker open on Wall Street.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook said.
Apple finds itself in a tricky position in China, a key market for sales and where it manufactures the bulk of the iconic products it sells worldwide, after the high-profile arrest in Canada of the CFO of domestic rival Huawei Technologies Co Ltd.
Since the arrest last month, at the request of the United States, there have been sporadic reports of Chinese consumers shying away from Apple products. Even before then, local rivals like Huawei had been gaining market share over Apple.
Cook told CNBC that Apple products have not been targeted by the Chinese government, though some consumers may have elected not to buy an iPhone or other Apple devices due to the firm being an American brand.
“The much larger issue is the slowing of the (Chinese) economy, and then the trade tension that has further pressured it,” Cook said.