Apple recently announced a profit warning which was largely placed as a result of it’s sales in China. STA Research believes that this statement had 2 particular motives.
Firstly they tried to shift resposibility from management failure, to a macro excuse, which has little merit. Canada Goose sales have continued to perform well under the situation of tensions between Canada and China, from which the arrest of Huawei officer Meng, saw Goose’s stock plunge on China sales fear. However their sales have remained resilient.
The second reason for Apple’s blame on China, was a political punch at the Trump Administration’s China tariff policy, which affects Apple more so than most American corporations. They are trying to arouse public opinion against the tariffs in hope of providing political pressure against Trump’s government . Apple is in short saying Trump’s aggressive policy on China will hurt American companies, and their profit warning is Trump’s fault.
The real reason that Apple has lowered it’s sales figures is because, well, lets be crude, it’s crap! On one’s first encounter with the iPhone XR, the first response is that it looks and feels like a kid’s phone. This appears to be a product that should have been made by Leap Frog, targeted at kids. The phone is really thick, the thick bezel looks silly, and it feel’s chunky all over.
To make things worse, the iPhone XR costs $750 in the US, $1030 Cdn in Canada, £750 in the UK, €850 in Europe, and ¥6500 in China which is roughly $950 American dollars. That is the problem. The iPhone XR should be priced no more than $400 American, period. One can justify the price of a iPhone XS, but not that of a XR. It’s entry level product has completely priced Apple out of the market. Huawei’s P20 and P20 lite are far cheaper and superior to the iPhone XR. Apple’s stock will be on a down trend until Apple sells a entry level product that’s priced to suit the regular consumer. Competition is just too tight for Apple to get away with the iPhone XR and it’s pricing structure.
STA Research
