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

Jermaine Castillo
January 5, 2019

In a carefully crafted letter, CEO Tim Cook said economic turmoil in China wreaked havoc on the company's top line.

Apple kicked in the New Year by revealing that sales of the company's flagship iPhone are slowing, resulting in the company revising its first quarter 2019 revenue guidance to $84 billion instead of the $89 billion and $93 billion it projected just a few months ago.

The selloff in Apple dragged its market capitalization below that of Alphabet Inc and set the stock for its biggest intra-day percentage fall in nearly six years.

USA shares fell after Apple CEO Tim Cook told shareholders after markets closed Wednesday that Chinese iPhone sales were slipping.

Apple on Wednesday lowered its revenue forecast to $84 billion for its first quarter ended December 29, below analysts' estimate of $88.05 billion. Indeed, in fiscal 2018, the company derived $51.9 billion from the region - a whopping 20% of its total revenue. Even Apple's iPhone XR, which was supposed to be a lower-cost alternative to the high-end iPhones, costs about 1,000 yuan more than a competing device.

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In his letter, Cook blamed the earlier launch timing of the iPhone XS and XS Max compared to the iPhone X, the strength of the United States dollar, supply constraints due to the number of new products Apple released in the fall, and overall economic weakness in some markets. That put Apple's market share in fifth place in the Chinese market.

Now the ongoing trade war between the US and China may be having even more of an impact.

"I think there are a heck of a lot of US companies that have a lot of sales in China that are basically going to be watching their earnings be downgraded next year". "Overall, consumption growth is slowing down in China".

Jerry Zigmont, owner of MacWorks, a New Haven, Conn. -based Apple consultancy, told CRN on Thursday that he hopes the troubles in Apple's business will be a "wake-up call for them".

Analysts and investors had been expecting a downturn in Apple's success for some time, after the company said it would stop disclosing unit sales data for its iPhones and other hardware products in November. "We believe the economic environment in China has been further impacted by rising trade tensions with the U.S.", he wrote. Apple's stock dropped by almost 10 percent once trading resumed.

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Apple shares plunged over 9 percent earlier this week as Wall Street was rattled by the Silicon Valley giant's shock revenue warning.

"Don't forget this: Apple makes their product in China", he says.

-China trade tensions, but said the company won't "sit around waiting for the macro to change" in an interview with CNBC. He didn't mention that Apple had priced its new models at stratospheric levels. "Apple innovates like no other company on earth, and we are not taking our foot off the gas".

There are likely many others, too, that will be forced to announce lower-than-expected earnings, according to the chairman of the White House Council of Economic Advisers. The Trump administration responded by Apple products from the tariffs. "It's going to be tough for Apple to get out of its way here, given the saturation in the smartphone market". Services generated $10.8 billion in revenue for the quarter - a 27 percent increase from a year earlier.

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