Apple financial miss not due to US-China trade dispute claims Commerce Secretary Wilbur Ro...

Posted:
in AAPL Investors
Commerce Secretary Wilbur Ross has advised that Apple's reduced revenue expectations are not due to trade tensions between the United States and China, while simultaneously claiming that the dispute between the two countries "certainly has hurt" the Chinese economy.

Commerce Secretary Wilbur Ross (via CNBC)
Commerce Secretary Wilbur Ross (via CNBC)


The surprise announcement by Apple on January 2 by CEO Tim Cook revealed the iPhone producer was anticipating reporting $84 billion in revenue in its upcoming quarterly financial report, down from the original forecast of between $89 billion and $93 billion. In the memo, Cook citied "lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall," including fewer iPhone upgrades during the period.

In response, Ross advised to CNBC's Squawk Box "I don't think Apple's earnings miss had anything to do with the present trade talks." Ross' reasoning is that "there have been no tariffs put on Apple products, so that's not it."



While Ross is correct that no Apple product has been subjected to a tariff in the current trade dispute between the two countries, the possibility has been floated. A fee on imported iPhones from China for the U.S. market has been touted as an option, one that could potentially add between $60 and $160 to the cost of an iPhone XS.

Ross continued by saying that the tariffs on Chinese goods "certainly has hurt the Chinese economy," noting reports claiming "Rate of growth in GDP heading down; rate of growth in retail sales heading down; rate of growth in capital investment heading down."

The second half of Ross' remarks are in-line with the Apple CEO's statements on the matter, issued the same day as the note advising of the earnings revision.

"It's clear that the economy began to slow there for the second half," said Cook. "What I believe to be the case is the trade tensions between the United States and China put additional pressure on the economy."

Despite his position as Commerce Secretary, Ross does not appear to have taken into account that a weakened economy will affect consumer spending habits, a possibility that likely leads to fewer iPhone sales in a challenged market.

On Friday, President Donald Trump commented on Apple's reduced revenue, but expressed minimal concern for its fortunes, instead taking the opportunity to urge Cook into shifting production towards the United States instead of China.

Apple may also be feeling the effects of a boycott by Chinese firms against its products, in retaliation for the U.S. Administration's trade policies as well as to show solidarity towards Huawei. Meng Wanzhou, Huawei's CFO, was arrested in Canada at the request of the U.S. government under claims the company violated sanctions against Iran, an arrest that may have been influenced by the trade talks.

Comments

  • Reply 1 of 17
    The GOP never factors consumers into any economic discussion. They consider "business" to consist entirely of ownership and investors.
    mac_dogracerhomie3magman1979rob53watto_cobramamun
  • Reply 2 of 17
    The GOP never factors consumers into any economic discussion. They consider "business" to consist entirely of ownership and investors.
    It's not that he didn't consider the slowing Chinese economy. It's just that it has no bearing in this instance. China's economy started slowing long before this so-called trade war. 
  • Reply 3 of 17
    Since the government and investors will hold Apple legally and financially responsible for the facts stated in their public statements, while government bureaucrats are essentially free from any consequences at all for their comments, and often have political reasons for their comments that are unrelated to anything a normal person would recognize as reality, I know who I am going to believe.
    ericthehalfbeedewmemagman1979rob53williamlondon
  • Reply 4 of 17
    tylersdad said:
    The GOP never factors consumers into any economic discussion. They consider "business" to consist entirely of ownership and investors.
    It's not that he didn't consider the slowing Chinese economy. It's just that it has no bearing in this instance. China's economy started slowing long before this so-called trade war. 
    He specifically stated that because there were no tariffs on iPhone that it wasn’t the reason. He is wrong because tariffs would have hurt sales here not China. By further damaging China’s economy via the trade war the tightening of the belt limits sales in Apple’s second largest market. This reality is what Cook specifically mentioned and ties to the second part of this guys statement about China’s economy being effected by the trade war. If our companies do good business in China and we hurt their economy we hurt our companies and therefore our economy. Tariffs have increased our job cuts by cutting into the profits of automakers. Caused retailers like Walmart to announce they will increase prices by up to 25%. 


    In the age of globalization no one really wins any kind of war. There are just millions of losers.  It like cutting of your nose to spite your face. 
    edited January 7 dewmetzm41thtmagman1979avon b7jony0
  • Reply 5 of 17
    Which contradicts what Trump economic advisor Kevin Hassett said:

    www.vox.com/platform/amp/2019/1/3/18166832/kevin-hassett-apple-china
  • Reply 6 of 17
    dewmedewme Posts: 2,198member
    Re: "In response, Ross advised to CNBC's Squawk Box "I don't think Apple's earnings miss had anything to do with the present trade talks." Ross' reasoning is that "there have been no tariffs put on Apple products, so that's not it." "

    A grown man actually said this? Wow. The lights may be on - but there's nobody home. 
    macplusplusmagman1979fastasleepjony0
  • Reply 7 of 17
    tbornottbornot Posts: 107member
    It’s funny, two years ago Hawaiians were dropping their kids into storm drains because of incoming Korean missile alerts.  Today, the problem is that we are running out of workers

    The President is supposed to work for Americans, not a technology company that treats their workers so bad they routinely edge up against charges of slavery, yet bring none of their ill gotten gains home.
    williamlondonelectrosoftk2kw
  • Reply 8 of 17
    racerhomie3racerhomie3 Posts: 1,169member
    Do they not have common sense?
    The fact that trade wars are affecting Chinese economy, is one reason why people are spending less money 💰. 🤦‍♂️ 
    magman1979rob53k2kw
  • Reply 9 of 17
    hentaiboyhentaiboy Posts: 1,034member
    I’ll post this again. Chinese economy can’t be that bad. Swiss watch exports there up 15% in November.



    williamlondonmuthuk_vanalingam
  • Reply 10 of 17
    magman1979magman1979 Posts: 1,152member
    tbornot said:
    It’s funny, two years ago Hawaiians were dropping their kids into storm drains because of incoming Korean missile alerts.  Today, the problem is that we are running out of workers

    The President is supposed to work for Americans, not a technology company that treats their workers so bad they routinely edge up against charges of slavery, yet bring none of their ill gotten gains home.
    Seriously? Did you just post that utter bullshit??
    berndogwatto_cobra
  • Reply 11 of 17
    Apple's problems are numerous. To deny they do not include trade relations with China is irresponsible. To imply they are the main reason for Apple's problems is disingenuous.
    tylersdadmuthuk_vanalingamwatto_cobra
  • Reply 12 of 17
    fastasleepfastasleep Posts: 3,298member
    tbornot said:
    It’s funny, two years ago Hawaiians were dropping their kids into storm drains because of incoming Korean missile alerts.  Today, the problem is that we are running out of workers

    The President is supposed to work for Americans, not a technology company that treats their workers so bad they routinely edge up against charges of slavery, yet bring none of their ill gotten gains home.
    None of these three sentences are grounded in any sort of reality. 
    watto_cobra
  • Reply 13 of 17
    genovelle said:
    tylersdad said:
    The GOP never factors consumers into any economic discussion. They consider "business" to consist entirely of ownership and investors.
    It's not that he didn't consider the slowing Chinese economy. It's just that it has no bearing in this instance. China's economy started slowing long before this so-called trade war. 
    He specifically stated that because there were no tariffs on iPhone that it wasn’t the reason. He is wrong because tariffs would have hurt sales here not China. By further damaging China’s economy via the trade war the tightening of the belt limits sales in Apple’s second largest market. This reality is what Cook specifically mentioned and ties to the second part of this guys statement about China’s economy being effected by the trade war. If our companies do good business in China and we hurt their economy we hurt our companies and therefore our economy. Tariffs have increased our job cuts by cutting into the profits of automakers. Caused retailers like Walmart to announce they will increase prices by up to 25%. 


    In the age of globalization no one really wins any kind of war. There are just millions of losers.  It like cutting of your nose to spite your face. 
    You obviously have no understanding of the unfair trade practices China has had in place for decades, their term theft of IP, monetary manipulation, etc. Trump is putting and end to it - at least he’s trying to.  This type of change isn’t painless but is needed. 
  • Reply 14 of 17
    geekmeegeekmee Posts: 336member
    Hmmm.... I wonder if consumers have voiced dissatisfaction with Apple products... And as a result are now buying other products??...Hmmm?

    muthuk_vanalingam
  • Reply 15 of 17
    tzeshantzeshan Posts: 2,049member
    The GOP never factors consumers into any economic discussion. They consider "business" to consist entirely of ownership and investors.
    The US government and Congress are mad about China. The consumers are not. The government and congress put trillions of dollars into consumers hands. The Fed incurs two trillions dollars in deficit in less than two years. Yet the consumers spent the money on Chinese made goods like the iPhone. 
  • Reply 16 of 17
    Since the government and investors will hold Apple legally and financially responsible for the facts stated in their public statements, while government bureaucrats are essentially free from any consequences at all for their comments, and often have political reasons for their comments that are unrelated to anything a normal person would recognize as reality, I know who I am going to believe.
    Please define “normal person”.......
  • Reply 17 of 17
    normmnormm Posts: 575member
    tedz98 said:
    You obviously have no understanding of the unfair trade practices China has had in place for decades, their term theft of IP, monetary manipulation, etc. Trump is putting and end to it - at least he’s trying to.  This type of change isn’t painless but is needed. 
    There are clearly real issues with China that need to be dealt with, and you correctly list a major one--IP theft--though currency manipulation is no longer an issue and hasn't been for a long time.  But I don't hear real issues being talked about.  Instead, the people running this "war" tell us that a trade deficit with China is something bad that it does to us, and that us charging a tariff gets back some of the deficit.  Well, I have a trade deficit with the local supermarket---I spend more there that it spends with me. I don't think it needs to be punished.  And a tariff is a tax on our own citizens!  It's not China's money, it's our money.  Even worse, most of the tariffs have been on intermediate goods, and so they hurt many industries in order to help a few.  It's all insanity.  It took many decades for the US to arrange the present world trading order, which works greatly to our favor, while making the world a safer and more peaceful place.  We're messing this up.  Chaos and ignorance aren't going to improve anything.

    edited January 8 badmonk
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