Apple Inc. has recently cut its revenue forecast for the first time in two decades. The reason for this downturn is the reduced sales in China, which have resulted in a slump for Asian suppliers and lower stock prices on Wall Street.
Tough Times For Tim Cook’s Apple
Apple’s CEO Tim Cook disclosed in a letter to investors that the company made sales of $84 billion in the last quarter of the year, which is down from the earlier predictions of between $89 and $93 billion. Cook became CEO in 2011, and the letter reports the first slowdown in sales since then. The announcement of the slowdown caused the stock to plummet by 8.5%.
The tech giant is facing challenges in selling the latest version of the iPhone, which brings in about two-thirds of its revenue. The main drop in revenue was seen in Greater China, which includes large markets like Hong Kong and Taiwan, where customers were unwilling to upgrade their iPhone products.
According to Wedbush Securities analyst Daniel Ives, Apple’s downturn was not a surprise, but it was the extent of the drop in China that was shocking. He called it ‘a jaw-dropper’, and the lack of foresight also made investors feel as though they were ‘walking blindfolded’. Wall Street firms have lowered their share price forecast by as much as 15% following Cook’s letter.
Supply Chain Reactions
The news of the drop in sales has also affected Apple’s tech supply chains, with key suppliers of hardware components in both Asia and Europe seeing a decline in share prices.