Natalie Pace. bestselling author of The Gratitude Game, The ABCs of Money & Put Your Money Where Your Heart is. Co-creator of the Earth Gratitude Project.
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China Takes a Bite Out of Apple Sales

8/8/2019

4 Comments

 
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In the 2nd quarter of 2019, Apple sank to the 4th position in global smartphone sales, behind Samsung (75.1 million shipments), Huawei (58.7 million) and Oppo (36.2 million). Apple’s sales/shipments were 35.3 million for the quarter (source: IHS Markit). According to Jusy Hong, IHS Markit’s research and analysis director, “Huawei was able to replace falling international shipments with increased sales in China. However, the full effects of the ban likely will be felt by Huawei’s international business in the third quarter of this year.”

​Actually, Huawei’s sales are strong in both China and Europe – costing Apple market share in both regions. (The ban is in the U.S., Australia and Japan.) According to Apple’s 2Q 2019 earnings report, net Apple sales in Greater China and Europe fell in the 2nd quarter year over year, by -4% and -2%, respectively. Sales in the Americas were also down 1%, while the rest of Asia Pacific and Japan increased 13% and 5.6%, respectively. Apple is projecting flat revenue growth of $61-$64 billion for the next quarter (its fiscal 4th quarter). 

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​What is perhaps just as relevant as slipping to 4th in smartphone sales is that Apple’s diluted earnings per share actually dropped 7%, despite a massive buyback attack from Apple of $17 billion in share repurchases. Apple has the largest corporate share buyback plan in the U.S. by far, having repurchased $74.2 billion in shares in 2018 and $41 billion already in the first half of this year. The current buyback program authorizes up to $75 billion in share repurchases. The company has $94 billion in cash and marketable securities, and $135 billion in total current assets.
 
So, is Apple’s new strategy to wage war on Huawei through the White House, while repurchasing its own shares to keep investor interest piqued? Or will there be a new exciting product launch on the horizon? In the 3rd quarter 2019 earnings press release Apple CEO Tim Cook promised, “The balance of calendar 2019 will be an exciting period, with major launches on all of our platforms, new services and several new products.” However, since Steve Jobs transitioned, the business strategy has been built more on political warfare and financial engineering than innovation. Apple’s Chief Design Officer Sir Jonathan Ive, the creative technological mind behind the Mac and the iPhone, left the company to launch his own on June 27, 2019. However, Apple will remain one of the new company’s primary clients, according to both Jony Ives and Tim Cook.
 

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Images c/o Wiki Commons, White House, Apple. Used with permission.


With 17% of Apple’s revenue coming from Greater China and 22% coming from Europe, Apple can’t afford to continue to lose market share in these countries. The tariffs and trade wars exacerbate the problem in these regions, while the Huawei ban should help Apple sales in Japan, the U.S. and Australia. A weaker yuan and stronger dollar mean that Apple’s already pricey products become unaffordable in China and Europe – even more so when compared to the prices of Huawei and Oppo. A general anti-White House sentiment in China doesn’t help. Tariffs and trade wars, and the fallout of this strategy, are problems that the White House can’t blame on the Federal Reserve.
 
Apple can afford to keep its share price afloat with share repurchases this year. However, declining sales will send a message to Wall Street that could taint investor appetite, particularly if Apple misses its revenue target in the fiscal 4th quarter of this year. That report won’t be released until the first week of November…
 
 
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I'm also offering an unbiased 2nd opinion on your current retirement plan. If you're worried that you have too much Apple in your portfolio, or would like to be sure that you are safe and properly diversified, then call 310.430.2397 or email info@NataliePace.com for pricing and information. 
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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.
4 Comments
tom
16/10/2019 12:03:20 am

l would like advice

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Natalie Pace link
16/10/2019 12:14:50 pm

Dear Tom, Please feel free to call our office at 310-430-2397. You can also email info @ NataliePace.com. You can access other blogs at https://www.nataliepace.com/blog. You can get links to Natalie Pace's bestselling books and life transformational retreats at https://www.nataliepace.com.

We're here to help with The ABCs of Money that we all should have received in high school.

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16/10/2019 07:38:54 am

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7/11/2019 09:49:59 am

I wonder why Apple sitll doesn't have store in Vietnam while the sale in VN is always higher than other countries? The Apple's sale can be higher than in Singapore or Thailand as Vietnamese is willing to pay for newest model from Apple

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    Natalie Pace is the co-creator of the Earth  Gratitude Project and the author of The Gratitude Game, The ABCs of Money and Put Your Money Where Your Heart Is. She blogs on Huffington Post and Medium, and is a frequent guest contributor to national news shows and magazines. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.

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