Apple shares dive; rare revenue warning drags global markets

Apple shares were down more than 8 percent in pre-market trading

Chief Executive Officer Tim Cook said sales will be about $84 billion in the quarter ended December 29, down from earlier estimates of $89 billion to $93 billion.

Apple shares sank about 9% at the start of trading Thursday, a day after the company issued a rare earnings warning that it chalked up largely to sluggish iPhone sales in China.

The sharp reaction puts Apple on track for its biggest one-day share price drop in five years and helped trigger a broader sell-off in U.S. shares as investors fretted about the state of the Chinese market and the broader outlook for the global economy.

Shares in Apple opened 8.6 per cent down on Wall Street this afternoon, after a shock revenue warning from chief executive Tim Cook caused shivers across global markets and exchanges.

Apple on Wednesday evening cut its revenue guidance for its crucial holiday quarter.

News that the iPhone maker cut its first-quarter revenue forecast, described by one analyst as Apple's "darkest day in the iPhone era", had something for everyone who has panicked over USA stocks in the past few months.

On the other hand, Cook also stressed that Apple showed considerable strengths in other areas (particularly in its cash assets: the company is now sitting on about $130 billion). The flagship product earns Apple about two-thirds of its revenue, and allows the company to generate more money from attached products like Apple Watches, AirPods, and services like Apple Music.

While disclosing a plunge in demand for the iPhone during Apple's recently completed quarter, CEO Tim Cook avoided any mention of whether increased iPhone prices might have played a role.

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The promotion in China is available until January 31, around the same time the iPhone maker is expected to release its fiscal first-quarter earnings.

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".

Although many analysts were anxious over Apple's iPhone issues, one remains unconcerned and upgraded Apple shares to "neutral" instead of "sell." as CNBC noted.

"There are a heck of a lot of USA companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China".

"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", Mr Cook wrote in the letter.

Cook said: "the trade tensions between the United States and China put additional pressure on their economy" which resulted in fewer customers.

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

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