Apple shares drop after news of waning iPhone sales

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Getty Images

In a letter to investors, Apple CEO Tim Cook pointed to a slowing economy, particularly in China.

Battered by negative Apple news, United States stock indices dropped sharply on Thursday morning.

Business Insider reports that the NY law firm Bernstein Liebhard has begun to attempt to gather support from Apple investors for a class-action lawsuit against the tech giant over their failure to warn investors about the lack of iPhone demand. "Don't forget, Apple makes the product in China".

"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.

To help boost iPhone sales, Mr Cook said Apple will expand its financing plans and build upon its recent efforts to make it easier to trade in older models at its stores. "While we don't expect zero sales to occur we believe investors will value this framework and the scenario analysis in this report". Here are three risks to Apple shares that investors need to be mindful of in 2019.

The U.S. -China trade dispute threatens to snarl multinational companies' supply lines and reduce demand for their products.

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Kevin Hassett, chairman of the White House council of economic advisers, said that USA companies selling in China would see their sales recover if the trade dispute is resolved. Universal Display Corp. declined 3.5 per cent and Lumentum Holdings Inc. tumbled 8.7 per cent. Shares of USA retailers that sell Apple products were also weak on the news.

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Trevor Ariza ($15 million) and Markieff Morris ($8.6 million) are the most practical to be moved due to their expiring contracts. The surgery to fix his injury puts Wall out of action for around six to eight months, which means the issue is season-ending.

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

Of course, it is nothing to do with Apple or the fact people don't seem to feel the need to pay over the odds for technology they can buy for less when last year's phone worked fine.

Apple and the White House didn't immediately respond to requests for comment.

Plunging tech shares weighed heavily on the Nasdaq Composite Index, which is now down 2% at 6,534.19. The Nasdaq composite, which has a high concentration of tech stocks, declined 3 per cent to 6,463.50.

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

Sales to the USA market have held up despite President Donald Trump's punitive tariffs on $250 billion of Chinese goods, rising 12.9 percent in November over a year earlier. Nevertheless, the relatively poor earnings performance has depressed Apple's share price by about 8% recently, and may have had a knock-on effect on other tech stocks.

But Windsor said: "I do not in any way think that this represents Apple's "Nokia" moment simply because there is still nothing to seriously challenge the iPhone in the high-end segment". The S&P 500 technology companies had their worst day since August 2011.

Apple cut its revenue outlook for the latest quarter on Wednesday, citing steeper-than-expected "economic deceleration" in China and emerging markets.

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