It’s all about Apple as it blames China

by Chris Becker

Looks like we’re reliving the GFC all over again with interconnectedness so high that global currency and stock markets are going to crash because some single Chinese youths are not buying as many iPhones as they should.

Apple announced a near 10% reduction in its forward guidance, releasing this report:

While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China. In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.

China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed. And market data has shown that the contraction in Greater China’s smartphone market has been particularly sharp.

In other words, consumer saturation has crept in. Is this a “blip” or a significant change in the way Apple operates its hardware or do you care and wonder why such a report is pushing the Aussie dollar down nearly 4 cents against the Greenbank in the last hour?

Local stocks are loving the lower dollar – the ASX is up over 1% in the first half hour of trade. Swings and roundabouts, but it pays to have protection right now.

 

 

 

Comments

  1. Blowback from Meng Wanzhou’s detention.

    https://asia.nikkei.com/Economy/Trade-War/Chinese-companies-rally-around-Huawei-after-CFO-arrest

    “Many Chinese businesses have told employees they will receive subsidies if they buy Huawei smartphones to aid the company. Most are subsidizing 10% to 20% of the purchase price, with some even covering the full amount. Over 20 Chinese companies also took to social media to announce that they will increase purchases of other Huawei products, such as its business management system.”

  2. Yes because the I phone is xxxite
    I’ve just bought the XS
    I hate it
    I’m buying a google next
    Might even throw this one in the bin
    I’m a spazo and why TF to I have to press 2 buttons to take a photo
    And that annoying extra connector jack

      • You’ll be first on my list
        I’m so tech retarded, the problem changing phones will be a night mare but I phone is no good
        There will be much cheaper better phones in 12/24 months 1/2 to 1/3 price

    • I’m a spazo and why TF to I have to press 2 buttons to take a photo
      And that annoying extra connector jack

      ?

      You take a photo with the onscreen button or volume + the same way you have since the original iPhone.

      What extra connector ? It’s got a lightning port like every iPhone for the last 6 years has.

      I get swiping up instead of hitting the home button might take a bit of getting used to, but it only takes a day or two.

      • @bc
        You have tell swipe up on Android 9 (Pie) also now, though you can switch it back to the old home button set up, but I expect that to go in Android 10.

  3. It’s all a little reminiscent of the last years of the Soviet Union when all the regions reported crop failures yet the official position was a bumper crop for the glorious socialist system. Everyone began to place incredible importance on verifiable somewhat external “facts”. These “Facts” (and they weren’t always true facts) regardless of how insignificant took on increased meaning because of the real information vacuum. There have been plenty of grassroots Chinese reports over the last 3 months suggesting that China is in recession, however at the next level it gets completely denied and by the time it’s combined at the country level we’re subjected to another “glorious socialist union” speech.
    In the end you have lots of nervous traders all focused on single data points and all trading with the same information bias.
    Fun times!

  4. kiwikarynMEMBER

    And is it just Apple? I read a comment on a Japanese news site, stating that Chinese consumers no longer want western brands. Is this the Govt directing consumers in the “national interest” due to trade wars, or via rewarding their social credit ranking for buying domestic, or have the Chinese just become more patriotic due to anti-western propaganda? Because if its not just Apple, we’re all in a big pile of @#$%

  5. I posted a video this morning in the links thread about foreigners leaving China. Seems the Government is making it harder for foreigners to do business over there.

  6. Ronin8317MEMBER

    The drop in Apple sales happen before the Huawei saga. There was no long queues outside the Bondi Junction Apple store from Chinese ‘Daigou’ buying the new iPhone when it was launched last year. A bit of it is due to the economic downturn, but most of it is the lack of killer features to justify the price. Apple still sold a lot though, just not as much as they want to.

  7. Seems like China is desperate to erect their own iron curtain. We should just put braces on our side too and be done with it.

    Free trade with China (and Asia more broadly) has been terrible for our prosperity and the resulting reduction in our wealth and middle class seems to prove it. The free reign we give them to steal IP via gov sanctioned cyber attacks is breath-taking. I can’t believe we haven’t cut the cable yet to them or an nation that won’t follow suit.

    • Hey, do you think that China stole the IP that’s needed to grow an ever-expanding housing bubble from us?

      I’m pretty sure that we invented that sh!t. And they’ve been doing it.

      We have been missing out on major royalties.

    • Free trade has worked well for capital rich boomers who sold out of property in the last few years. It’s the young and less wealthy who have paid the price.

    • “Free trade with China (and Asia more broadly) has been terrible for our prosperity and the resulting reduction in our wealth and middle class seems to prove it. ”
      What a lunatic assertion. Australia would be rooted without Chinese purchasing of our Exports over the past 20 odd years – Our Govt allowing them to immigrate & buy houses & land is another matter altogether. Your sprouting of MSM BS about Chinese cyber attacks & stealing IP etc is just propaganda. The USA has the worlds largest cyber espionage programme & has been stealing Commercial systems World Wide from well before the Internet came into being. Don’t be brain dead.

  8. It’s pretty simple, the devices are getting too expensive, relative to what you get.
    Sure the ecosystem has a lot of people on board – there is no denying it.
    But I think people are tiring of the conformity. This is a cyclical phenomenon.

  9. Imagine being a chinese investor, buying a new apartment in Australia.

    The pride, that your countrymens skills are used in the construction and the materials are sourced from your homeland.

    The dismay.

  10. I sold Apple in august. It’s been apparent for some time that Apple is attempting to charge a premium price for an increasingly commoditised product. The issue isn’t the product, it’s the profit margin.

    • They don’t call it a walled garden for nothing peter…. say some 100K+ building super I know that after some years of family immersion – of all life’s aspects – can’t migrate out of it – all data storage and financial records are hostage.

      • I bet he can, it’s just complex, time consuming, and inconvenient.

        Which is the tradeoff of paying someone else to make things in your life simple, quick and easy.

  11. HadronCollision

    Who here doesn’t like the ever increasing phone size? I think the SE and perhaps 7 are perhaps the optimum size. Which means, when a replacement is needed, what are the choices? Chase a diminishing stock of SEs and 7s, suck it up and be forced onto a larger footprint , or change brands. I’d not buy a google phone – refer to Jaron Lanier’s latest book

  12. The Apple issue actually has sagged the Dow (Apple being nearly 5% of the Dow – inherently overvalued, a correction long overdue).
    The Dow is still up 32% from the end of the dark era of Obama total failure*, it’s just the long overdue correction of Apple & a few others that has reset or stabilised the overall index. (*End of Obama as a market view – Nov 5th 2016 Dow 17,800.
    Trump Dow current 23,500 – so DOW is up 32%.)
    -/-
    The Apple products including the iPhone are overpriced & lack any new compelling features.
    512GB iPhone XS Max, AUD $2,369.
    But the cost to make? (Bloomberg & other sources) Aud $440.
    Nothing really new or particularly useful in the Apple offerings to justify that 81% markup in price
    It’s been over 4 years since the iPhone 6 release in September 2014 & still much the same product.
    Apple is just a gouging, monopolistic, stale, lumbering profit taking highly overvalued tech product maker that’s failed to innovate or evolve in consumer demand.

    Either Apple face the consumer market in some better priced & more innovative product, or use their cash flow & capitalisation to diversify & buy something like Tesla or other tech consumer products.

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