Citing 'deterioration' in China, Apple warns sales will fall short

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But it's running into big trouble in China.

CEO Tim Cook made the announcement after the market closed last night, giving credence to the fears of some investors, who have been dumping Apple shares amid signs the latest iPhone models weren't living up to sales expectations.

The company forecast $84 billion in revenue for its fiscal first quarter ended December 29, which is below analysts' estimate of $91.5 billion, according to IBES data from Refinitiv. Revised revenues would be approximately $84 billion, the Wednesday letter said.

Looking beyond the latest quarter, BMO warned that "a less-compelling new lineup that is priced well above competitive products, coupled with trade tensions, will probably mean more tough quarters ahead for the China business".

In a letter to investors on Wednesday, chief executive Tim Cook said the firm's sales problems were primarily in its Greater China region, which includes Hong Kong and Taiwan and accounts for nearly 20 percent of its revenue.

That's a huge problem: China makes up about 20% of Apple's revenues globally.

Analysts see iPhone's high price point and lack of major updates as the major reasons for the Chinese market's lukewarm reaction to its new iPhone releases. As Cook noted, government-reported GDP growth during the September quarter was the second lowest in the last 25 years. She attributes the weaker sales to competition from Huawei, which just had a strong 2018.

However, the company added, economic weakness in some emerging markets "turned out to have a significantly greater impact than we had projected", adding that "these and other factors resulted in fewer iPhone upgrades than we had anticipated".

Cook told CNBC that trade tensions between the two economic heavyweights are putting "additional pressure on their economy". "And market data has shown that the contraction in Greater China's smartphone market has been particularly sharp". Other brands such as General Motors (GM), Volkswagen (VLKAF) and Starbucks (SBUX), which will report earnings in the coming weeks, could be affected.

Those companies are increasingly reliant on Chinese sales. But they said activity could pick up if the US and China settle their disputes ahead of a March 2 deadline to impose steep new American tariffs on $200 billion in Chinese goods. Additionally, Bloomberg's Mark Gurman noted that Cook is slated to address Apple staff about the decline in sales on Thursday - another sign that the company is anxious about these numbers.

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