Apple warns of profound 'economic deceleration' in China

In a letter to investors released Wednesday, Apple CEO Tim Cook said that the company's revenue for the quarter that ended on Dec. 29 will be about $84 billion, well below its earlier earning estimates of between $89 billion and $93 billion.

After the letter was made public, Apple's stock dropped more than 7 percent in after-hours trading. Cook wrote that the company "anticipated some challenges in key emerging markets," but 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."

Cook also said Apple believes that China's economy, which began to slow down in the second half of 2018, is being "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."

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